AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 12, 1998
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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<S> <C> <C>
THE AES CORPORATION DELAWARE 54-1163725
AES TRUST II DELAWARE 54-1840550
(Exact name of Registrant as (State or other jurisdiction of (I.R.S. employer
specified in its charter) incorporation or organization) identification number)
</TABLE>
1001 NORTH 19TH STREET ARLINGTON, VIRGINIA 22209 (703) 522-1315
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
BARRY J. SHARP 1001 NORTH 19TH STREET ARLINGTON, VIRGINIA 22209 (703) 522-1315
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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Copies to:
RICHARD D. TRUESDELL, JR. DAVIS POLK & WARDWELL 450 LEXINGTON AVENUE NEW YORK,
NEW YORK 10017 (212) 450-4000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to
time after this Registration Statement becomes effective.
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If the only securities being registered on this form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. [ ]
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities being offered only in connection with dividend or
interest reinvestment plans, please check the following box. [X]
If this form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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<TABLE>
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PROPOSED MAXIMUM PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS AMOUNT TO BE AGGREGATE PRICE AGGREGATE AMOUNT OF
OF SECURITIES TO BE REGISTERED REGISTERED (1) PER UNIT (4) OFFERING PRICE (4) REGISTRATION FEE
<S> <C> <C> <C> <C>
Term Convertible Preferred Securities of AES Trust II ("Pre-
ferred Securities") ....................................... 6,000,000 $ 50.00 $300,000,000 $88,500
Junior Subordinated Debt Securities of The AES Corpora-
tion ("Junior Subordinated Debt Trust Securities") ........ (2)
Common Stock of The AES Corporation ("Common Stock") (3)
Guarantees of Preferred Securities of AES Trust II by the
AES Corporation ("Preferred Securities Guarantee")(5) .....
Total ...................................................... 6,000,000 $ 50.00 $300,000,000 $88,500
</TABLE>
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(1)Estimated solely for the purpose of computing the registration fee in
accordance with Rule 457(c) of the Securities Act.
(2) $309,278,400 in aggregate principal amount of 5.50% Junior Subordinated Debt
Trust Securities were issued and sold to AES Trust II (the "Trust") in
connection with the issuance by the Trust of 6,000,000 of its $2.75 Term
Convertible Preferred Securities, Series B (the "Preferred Securities"). The
Junior Subordinated Debt Trust Securities may be distributed, under certain
circumstances, to the holders of Preferred Securities for no additional
consideration.
(3) 5,348,500 shares of Common Stock of the Company ("Common Stock") are
issuable initially upon conversion of the Preferred Securities being
registered hereunder at the conversion rate of 0.8914 shares of Common Stock
for each Preferred Security. An indeterminate number of shares of Common
Stock as may be issuable upon conversion of the Preferred Securities are
registered hereunder, including such shares as may be issuable pursuant to
antidilution adjustments. The Common Stock issuable upon conversion of the
Preferred Securities, if issued, will be issued for no additional
consideration.
(4) Exclusive of accrued interest and distributions, if any.
(5) No separate consideration will be received for the Preferred Securities
Guarantee or any back-up undertakings. Includes the rights of holders of the
Preferred Securities of the Trust under the Trust Preferred Securities
Guarantee and back-up undertakings, consisting of obligations by The AES
Corporation to provide certain indemnities in respect of, and pay and be
responsible for certain expenses, costs, liabilities, and debts of the Trust
and such other obligations of The AES Corporation set forth in the Amended
and Restated Declaration of Trust, the Junior Subordinated Debt Trust
Securities Indenture and Supplemental Indentures thereto, in each case as
further described in the Registration Statement.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE>
SUBJECT TO COMPLETION, DATED FEBRUARY 12, 1998
PROSPECTUS
FEBRUARY __, 1998
6,000,000 Securities
AES TRUST II
$2.75 Term Convertible Securities, Series B ("TECONS SM")
(Liquidation amount $50 per security) fully and unconditionally guaranteed as
set forth herein by and convertible into Common Stock of,
[AES LOGO] THE AES CORPORATION
The $2.75 Term Convertible Securities, Series B (the "TECONS" or "Preferred
Securities"), liquidation amount $50 per security, offered for resale hereby
were issued by AES Trust II, a statutory business trust formed under the laws of
the State of Delaware ("AES Trust" or the "Trust"). These TECONS represent
preferred undivided beneficial interests in the assets of the Trust. The TECONS
were issued and sold (the "Original Offering") on October 29, 1997 (the
"Original Offering Date") to certain initial purchasers (the "Initial
Purchasers") and were simultaneously sold by the Initial Purchasers in
transactions exempt from the registration requirements of the Securities Act of
1933, as amended (the "Securities Act"), in the United States to persons
reasonably believed by the Initial Purchasers to be qualified institutional
buyers ("Qualified Institutional Buyers") as defined in Rule 144A under the
Securities Act or institutional accredited investors as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act ("Institutional Accredited
Investors") and outside the United States to non-U.S. persons in offshore
transactions in reliance on Regulation S under the Securities Act.
The AES Corporation, a Delaware corporation ("AES" or the "Company"), owns
directly or indirectly all the common securities (the "Common Securities" or the
"Trust Common Securities," and together with the TECONS, the "Trust
Securities"), representing undivided beneficial interests in the assets of AES
Trust. AES Trust exists for the sole purpose of issuing the TECONS and the Trust
Common Securities and investing the proceeds thereof in 5.50% Junior
Subordinated Convertible Debentures due 2012 (the "Junior Subordinated
Debentures") of AES in an aggregate principal amount equal to the aggregate
liquidation amount of the Trust Securities. The Junior Subordinated Debentures
and the TECONS in respect of which this Prospectus is being delivered are
referred to herein as the "Offered Securities." The Junior Subordinated
Debentures are unsecured obligations of AES subordinate and junior in right of
payment to certain other indebtedness of AES as described herein. Upon a
Declaration Event of Default (as defined herein), the holders of the TECONS will
have a preference over the holders of the Trust Common Securities with respect
to payment in respect of Distributions (as defined herein) and payments upon
redemption, liquidation and otherwise.
The TECONS (and the Junior Subordinated Debentures and the securities
issuable upon conversion) in respect of which this Prospectus is being delivered
(the "Offered Securities") may be offered and sold from time to time by the
holders thereof named herein or in a supplement hereto (collectively, the
"Selling Holders") pursuant to this Prospectus as supplemented. The Offered
Securities may be sold by the Selling Holders from time to time directly to
purchasers or through agents, underwriters or dealers. See "Plan of
Distribution" and "Selling Holders." If required, the names of any such agents
or underwriters involved in the sale of the Offered Securities and the
applicable agent's commission, dealer's purchase price or underwriter's
discount, if any, will be set forth in an accompanying supplement to this
Prospectus (the "Prospectus Supplement"). The Selling Holders will receive all
of the net proceeds from the sale of the Offered Securities and will pay all
underwriting discounts and selling commissions, if any, applicable to any such
sale. The Company is responsible for payment of all other expenses incident to
the offer and sale of the Offered Securities. The Selling Holders and any
broker-dealers, agents or underwriters which participate in the distribution of
the Offered Securities may be deemed to be "underwriters" within the meaning of
the Securities Act, and any commission received by them and any profit on the
resale of the Offered Securities purchased by them may be deemed to be
underwriting commissions or discounts under the Securities Act. See "Plan of
Distribution" for a description of indemnification arrangements.
Holders of the TECONS are entitled to receive cumulative cash distributions
at an annual rate of $2.75 per TECONS, accruing from October 29, 1997 and
payable quarterly in arrears on the last day of each calendar quarter,
commencing on December 31, 1997. The term "Distributions" as used herein
includes such cash distributions and any interest payable thereon unless
otherwise stated. The Distribution rate and the Distribution and other payment
dates for the TECONS will correspond to the interest rate and the interest and
other payment dates on the Junior Subordinated Debentures deposited in the Trust
as trust
SEE "SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS" AND "RISK FACTORS"
FOR A DESCRIPTION OF CERTAIN RISK FACTORS THAT SHOULD BE CONSIDERED BY
PROSPECTIVE INVESTORS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURI-
TIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES EXCHANGE COMMISSION OR ANY STATE SE-
CURITIES COMMISSION PASSED UPON THE ACCURACY OR ADE-
QUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
<PAGE>
assets. If principal or interest is not paid on the Junior Subordinated
Debentures, including as a result of the Company's election to extend the
interest payment period on the Junior Subordinated Debentures as described
below, the Trust will not make payments on the Trust Securities. The Junior
Subordinated Debentures provide that, so long as the Company shall not be in
default in the payment of interest on the Junior Subordinated Debentures, the
Company shall have the right to defer payments of interest on the Junior
Subordinated Debentures by extending the interest payment period from time to
time for a period not exceeding 20 consecutive quarterly interest periods (each,
an "Extension Period"). No interest shall be due and payable during an Extension
Period and, as a consequence, distributions on the Trust Securities will also be
deferred, but at the end of such Extension Period the Company shall pay all
interest then accrued and unpaid on the Junior Subordinated Debentures, together
with interest thereon at the rate specified for the Junior Subordinated
Debentures to the extent permitted by applicable law, compounded quarterly
("Compounded Interest"). All references herein to interest shall include
Compounded Interest unless otherwise stated. There could be multiple Extension
Periods of varying lengths throughout the term of the Junior Subordinated
Debentures, not to exceed 20 consecutive quarters; provided, that no such period
may extend beyond the stated maturity of the Junior Subordinated Debentures.
During any such Extension Period, the Company may not declare or pay dividends
on, or redeem, purchase, acquire or make a distribution or liquidation payment
with respect to, any of its common stock or preferred stock; provided that the
foregoing will not apply to any stock dividends paid by the Company in its
common stock, par value $.01 per share (the "AES Common Stock" or the "Common
Stock"). See "Description of the Junior Subordinated Debentures -- Interest" and
"-- Option to Extend Interest Payment Period" and "Risk Factors -- Option to
Extend Interest Payment Period; Tax Impact of Extension."
The payment of Distributions out of moneys held by AES Trust and payments
on liquidation of AES Trust and the redemption of TECONS, as set forth below,
are guaranteed by the Company on a subordinated basis (the "Guarantee") as and
to the extent described herein. The Guarantee is a full and unconditional
guarantee from the time of issuance of the TECONS, but the Guarantee covers
Distributions and other payments on the TECONS only if and to the extent that
AES Trust has funds available therefor, which will not be the case unless the
Company has made a payment to the Property Trustee (as defined herein) of
interest or principal on the Junior Subordinated Debentures deposited in the
Trust as trust assets. The obligations of the Company under the Guarantee are
subordinate and junior in right of payment to all other liabilities of the
Company, including Junior Subordinated Debentures, and will rank pari passu in
right of payment with the most senior preferred stock issued, from time to time,
if any, by AES. The obligations of the Company under the Junior Subordinated
Debentures are subordinate and junior in right of payment to all present and
future Senior and Subordinated Debt (as defined herein). Because the Company is
a holding company, the Junior Subordinated Debentures (and the Company's
obligations under the Guarantee) are also effectively subordinated to all
existing and future liabilities, including trade payables, of the Company's
subsidiaries, except to the extent that the Company is a creditor of the
subsidiaries and recognized as such.
Each TECONS is convertible in the manner described herein at the option of
the holder, at any time prior to the Conversion Expiration Date (as defined
herein), into AES Common Stock at the initial rate of 0.8914 shares of AES
Common Stock for each TECONS (equivalent to an initial conversion price of
$56.09 per share of AES Common Stock), subject to adjustment in certain
circumstances. See "Description of the TECONS -- Conversion Rights." The AES
Common Stock is listed on the NYSE under the symbol "AES." On February 10, 1998,
the reported last sale price of the AES Common Stock on the NYSE Composite Tape
was $41.25 per share.
The Junior Subordinated Debentures are redeemable by the Company (in whole
or in part) from time to time, on or after September 30, 2000 at the prices
specified herein or at any time in certain circumstances upon the occurrence of
a Tax Event (as defined herein) at 100% of the principal amount thereof plus
accrued and unpaid interest thereon to the date fixed for redemption (the
"Redemption Price"). If the Company redeems Junior Subordinated Debentures, the
Trust must redeem, at the Redemption Price, Trust Securities having an aggregate
liquidation amount equal to the aggregate principal amount of the Junior
Subordinated Debentures so redeemed. See "Description of the TECONS -- Mandatory
Redemption." The TECONS will be redeemed upon maturity of the Junior
Subordinated Debentures. The Junior Subordinated Debentures mature on September
30, 2012. In addition, upon the occurrence of a Special Event (as defined
herein) arising from a change in law or a change in legal interpretation, unless
the Junior Subordinated Debentures are redeemed in the limited circumstances
described below, the Trust shall be dissolved with the result that the Junior
Subordinated Debentures will be distributed to the holders of the Trust
Securities, on a pro rata basis, in lieu of any cash distribution. In the case
of a Special Event that is a Tax Event, the Company will have the right in
certain circumstances to redeem the Junior Subordinated Debentures, which would
result in the redemption by the Trust of the Trust Securities in the same amount
on a pro rata basis. See "Description of the TECONS -- Special Event Redemption
or Distribution" and "Description of the Junior Subordinated Debentures."
In the event of the voluntary or involuntary dissolution, winding up or
termination of the Trust, the holders of the TECONS will be entitled to receive,
for each TECONS, a liquidation amount of $50 plus accrued and unpaid
distributions thereon (including interest thereon) to the date of payment,
unless in connection with such dissolution, the Junior Subordinated Debentures
are distributed to the holders of the TECONS. See "Description of the TECONS --
Liquidation Distribution Upon Dissolution."
<PAGE>
No person has been authorized to give any information or to make any
representations other than those contained or incorporated by reference in this
Prospectus (this "Prospectus") in connection with the offer made hereby and if
given or made such information or representation must not be relied upon as
having been authorized by the Company, the Trust or any other person. Neither
the delivery of this Prospectus nor any sale made hereunder shall, under any
circumstances, create any implication that there has been no change in the
affairs of the Company or the Trust since the date hereof or that the
information contained or incorporated by reference herein is correct as of any
time subsequent to its date. This Prospectus does not constitute an offer to
sell or a solicitation of an offer to buy the securities offered hereby by
anyone in any jurisdiction in which such offer or solicitation is not authorized
or in which the person making such offer or solicitation is not qualified to do
so or to anyone to whom it is unlawful to make such offer or solicitation.
TABLE OF CONTENTS
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PAGE PAGE
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Available Information .......................... 3 Description of the Guarantee ................... 47
Incorporation of Certain Documents by Ref- Description of the Junior Subordinated De-
erence ...................................... 4 bentures .................................... 50
Special Note Regarding Forward Looking Relationship Between the TECONS, the Junior
Statements .................................. 4 Subordinated Debentures and the Guarantee. 59
Prospectus Summary ............................. 5 Certain Federal Tax Consequences ............... 60
Risk Factors ................................... 16 ERISA Considerations ........................... 65
Ratio of Earnings to Fixed Charges ............. 25 Selling Holders ................................ 67
Use of Proceeds ................................ 26 Plan of Distribution ........................... 67
Price Range of Common Stock and Dividend Legal Matters .................................. 68
Policy ...................................... 26 Experts ........................................ 68
AES Trust II ................................... 28 Notice of Transfer ............................. Appendix A
Description of the TECONS ...................... 30
</TABLE>
AVAILABLE INFORMATION
AES is subject to the informational requirements of the Exchange Act, and
in accordance therewith files reports, proxy and information statements and
other information with the Commission. These reports, proxy and information
statements and other information may be inspected without charge and copied at
the public reference facilities maintained by the Commission at its principal
offices at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and
at the Commission's regional offices located at Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661, and 7 World Trade Center,
Suite 1300, New York, New York 10048. Copies of such materials also can be
obtained at prescribed rates from the Public Reference Section of the Commission
at the principal offices of the Commission at Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549. Such material may also be inspected at the offices
of the National Association of Securities Dealers, Inc., 1735 K Street, N.W.,
Washington, D.C. 20006. Such material may also be accessed electronically by
means of the Commission's home page on the Internet at http://www.sec.gov.
The Company has agreed that, whether or not it is required to do so by the
rules and regulations of the Commission, for so long as any of the TECONS remain
outstanding, it will furnish to the holders of the TECONS and file with the
Commission (i) all quarterly and annual financial information that would be
required to file such forms, including contained in a filing with the Commission
on Forms 10-Q and 10-K if the Company were required to be filed on such forms,
including a "Discussion and Analysis of Financial Condition and Results of
Operations" and, with respect to the annual information only, a report thereon
by the Company's certified independent auditors and (ii) all reports that would
be required to be filed with the Commission on Form 8-K if the Company were
required to file such reports. In addition, for so long as any of the TECONS
remain outstanding, the Company has agreed to make available to any prospective
purchaser of the TECONS or any beneficial owner of the TECONS in connection with
any sale thereof the information required by Rule 144A(d)(4) under the
Securities Act.
3
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company hereby incorporates in this Prospectus by reference thereto and
makes a part hereof the following documents, heretofore filed with the
Commission pursuant to the Exchange Act: (i) the Company's Annual Report on Form
10-K for the year ended December 31, 1996; (ii) the Company's Quarterly Report
on Form 10-Q for the quarter ended March 31, 1997; (iii) the Company's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1997; (iv) the Company's
Quarterly Report on Form 10-Q for the quarter ended September 30, 1997; (v) the
Company's Current Reports on Form 8-K filed on January 9, 1998, November 10,
1997, November 6, 1997, October 24, 1997, August 18, 1997, July 16, 1997, July
15, 1997, July 14, 1997, July 3, 1997, March 24, 1997, March 13, 1997, February
18, 1997 and January 30, 1997 and the Company's Current Reports on Form 8-K/A
filed on November 7, 1997 and August 3, 1997.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
termination of the Offering being made hereby shall be deemed to be incorporated
in this Prospectus by reference and to be a part hereof from the respective
dates of the filing of such documents. Any statement contained herein or in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any subsequently filed document
which also is, or is deemed to be, incorporated by reference herein, modifies or
supersedes such earlier statement. Any statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
The Company hereby undertakes to provide without charge to each person to
whom a copy of this Prospectus has been delivered, upon written or oral request
of any such person, a copy of any and all of the documents referred to above
which have been or may be incorporated in this Prospectus by reference, other
than exhibits to such documents which are not specifically incorporated by
reference into such documents. Requests for such copies should be directed to
William R. Luraschi, General Counsel and Secretary, The AES Corporation, 1001
North 19th Street, Arlington, Virginia 22209, telephone (703) 522-1315.
SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS
Certain statements under the captions "Prospectus Summary" and under the
caption "Risk Factors" in this Prospectus constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995 ("Reform Act"). Such forward-looking statements involve known and
unknown risks, uncertainties and other factors which may cause the actual
results, performance and achievements of AES, or industry results, to be
materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. Such factors include,
among other things, the following factors, as well as those factors discussed in
the section entitled "Risk Factors" and those discussed elsewhere in AES's
filings with the Commission, including its Current Report on Form 8-K dated
February 26, 1996; changes in company-wide operation and availability compared
to AES's historical performance; changes in AES's historical operating cost
structure, including changes in various costs and expenses; political and
economic considerations in certain non-U.S. countries where AES is conducting or
is seeking to conduct business; restrictions on foreign currency convertibility
and remittance abroad, exchange rate fluctuations and developing legal systems;
regulation and restrictions; legislation intended to promote competition in U.S.
and non-U.S. electricity markets; tariffs; governmental approval processes;
environmental matters; construction, operating and fuel risks; load growth,
dispatch and transmission constraints; conflict of interest of contracting
parties; and adherence to the AES principles; and other factors referenced in
this Prospectus. See "Risk Factors."
4
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by, and should be read
in connection with, the more detailed information and consolidated financial
statements and the notes thereto included and incorporated by reference in this
Prospectus. References herein to "AES" or the "Company" include The AES
Corporation and its subsidiaries and affiliates unless the context requires
otherwise and references herein to "MW" are to megawatts.
THE COMPANY
AES is a global power company committed to supplying electricity to
customers world-wide in a socially responsible way. The Company was one of the
original entrants in the independent power market and today is one of the
world's largest global power companies, based on net equity ownership of
generating capacity (in megawatts) in operation or under construction. AES
markets power principally from electricity generating facilities that it
develops, acquires, owns and operates.
Over the last five years, the Company has experienced significant growth.
This growth has resulted primarily from the development and construction of new
plants ("greenfield development") and also from the acquisition of existing
generating plants and distribution companies, through competitively bid
privatization initiatives outside of the United States or negotiated
acquisitions. Since 1992, the Company's total generating capacity in megawatts
has grown from 1,829 MW to 16,938 MW (an increase of 826%), with the total
,number of plants in operation increasing from eight to 73. Additionally, the
Company's total revenues have increased at a compound annual growth rate of 20%
from $401 million in 1992 to $835 million in 1996, while net income has
increased at a compound annual growth rate of 22% from $56 million to $125
million and Consolidated EBITDA (as defined herein) has increased from $45
million to $189 million over the same period.
AES operates and owns (entirely or in part), through subsidiaries and
affiliates, power plants in ten countries with a capacity of approximately
16,938 MW (including 4,000 MW attributable to Ekibastuz which currently has a
capacity factor of up to approximately 20%). AES is also constructing 9
additional power plants in seven countries with a capacity of approximately
4,921 MW. The Company's total ownership in plants in operation and under
construction aggregates approximately 21,859 MW and its net equity ownership in
such plants is approximately 11,379 MW. In addition, AES has numerous projects
in advanced stages of development, including seven projects with design capacity
of approximately 3,398 MW that have executed or been awarded power sales
agreements.
The Company is also engaged (entirely or in part) in electric power
distribution businesses in Latin America through its subsidiaries and
affiliates. These subsidiaries and affiliates (including CCODEE) (as defined
herein) serve approximately eight million commercial, industrial and residential
customers using approximately 63,000 gigawatt hours per year.
As a result of the Company's significant growth in recent years, the
Company's operations have become more diverse with regard to both geography and
fuel source and it has reduced its dependence upon any single project or
customer. During 1996, four of the Company's projects individually contributed
more than 10% of the Company's total revenues; Shady Point which represented
approximately 20%, San Nicolas which represented approximately 16%, Thames which
represented approximately 16% and Barbers Point which represented approximately
15%.
The Company, a corporation organized under the laws of Delaware, was formed
in 1981. The principal office of the Company is located at 1001 North 19th
Street, Suite 2000, Arlington, Virginia 22209, and its telephone number is (703)
522-1315.
5
<PAGE>
OUTLOOK
The global trend of electricity market restructuring has created
significant new business opportunities for companies like AES. Both domestic and
international electricity markets are being restructured and there is a trend
away from government-owned electricity systems toward deregulated, competitive
market structures. Many countries have rewritten their laws and regulations to
allow foreign investment and private ownership of electricity generation,
transmission or distribution systems. Some countries have or are in the process
of "privatizing" their electricity systems by selling all or part of such
systems to private investors. With 68 of its operating plants and distribution
companies having been acquired or commenced commercial operations since 1992,
AES has been an active participant in both the international privatization
process and the development process. The Company is currently pursuing over 90
projects including acquisitions, the expansion of existing plants and new
projects.
AES believes that there is significant demand for both new and more
efficiently operated electric generating capacity in many regions around the
world. In an effort to further grow and diversify the Company's portfolio of
electric generating plants, AES is pursuing, through its integrated divisions,
additional greenfield developments and acquisitions in many countries. Several
of these acquisitions, if consummated, would require the Company to obtain
substantial additional financing, in the form of both debt and equity financing,
in the short term.
STRATEGY
The Company's strategy in helping meet the world's need for electricity is
to participate in competitive power markets as they develop either by greenfield
development or by acquiring and operating existing facilities or distribution
systems in these markets. The Company generally operates electric generating
facilities that utilize natural gas, coal, oil, hydro power, or combinations
thereof. In addition, the Company participates in the electric power
distribution and retail supply businesses in certain limited instances, and will
continue to review opportunities in such markets in the future.
Other elements of the Company's strategy include:
o Supplying energy to customers at the lowest cost possible, taking into
account factors such as reliability and environmental performance;
o Constructing or acquiring projects of a relatively large size (generally
larger than 100 MW);
o When available, entering into power sales contracts with electric
utilities or other customers with significant credit strength; and
o Participating in electric power distribution and retail supply markets
that grant concessions with long-term pricing arrangements.
The Company also strives for operating excellence as a key element of its
strategy, which it believes it accomplishes by minimizing organizational layers
and maximizing company-wide participation in decision-making. AES has attempted
to create an operating environment that results in safe, clean and reliable
electricity generation. Because of this emphasis, the Company prefers to operate
all facilities which it develops or acquires; however, there can be no assurance
that the Company will have operating control of all of its facilities.
Where possible, AES attempts to sell electricity under long-term power
sales contracts. The Company attempts, whenever possible, to structure the
revenue provisions of such power sales contracts such that changes in the cost
components of a facility (primarily fuel costs) correspond, as effectively as
possible, to changes in the revenue components of the contract. The Company also
attempts to provide fuel for its operating plants generally under long-term
supply agreements, either through contractual arrangements with third parties
or, in some instances, through acquisition of a dependable source of fuel.
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As electricity markets become more competitive, it may be more difficult
for AES (and other power generation companies) to obtain long-term power sales
contracts. In markets where long-term contracts are not available, AES will
pursue methods to hedge costs and revenues to provide as much assurance as
possible of a project's profitability. In these situations, AES might choose to
purchase a project with a partial hedge or with no hedge, with the strategy that
its diverse portfolio of projects provides some hedge to the increased
volatility of the project's earnings and cash flow. Additionally, AES may choose
not to participate in these markets.
The Company attempts to finance each domestic and foreign plant primarily
under loan agreements and related documents which, except as noted below,
require the loans to be repaid solely from the project's revenues and provide
that the repayment of the loans (and interest thereon) is secured solely by the
capital stock, physical assets, contracts and/or cash flow of that plant
subsidiary or affiliate. This type of financing is generally referred to as
"project financing." The lenders under these project financing structures cannot
look to AES or its other projects for repayment, unless such entity explicitly
agrees to undertake liability. AES has explicitly agreed to undertake certain
limited obligations and contingent liabilities, most of which by their terms
will only be effective or will be terminated upon the occurrence of future
events. In certain circumstances, the Company may incur indebtedness which is
recourse to the Company or to more than one project.
RECENT DEVELOPMENTS
Recent Acquisitions
On January 26, 1998, the Company announced that it was selected by the
Government of Bangladesh Ministry of Energy and Mineral Resources as the winning
bidder to build, own and operate a 360 MW (net) gas-fired combined cycle power
plant at a site near Dhaka, Bangladesh ("Haripur"). Haripur is expected to
commence commercial operations in the year 2000, and electricity will be sold to
the Bangladesh Power Development Board under the terms of a 22-year power
purchase agreement which is expected to be signed following the formal award.
Titus Gas Transmission and Distribution Company, a subsidiary of Petrobangla,
will supply natural gas to the facility from a nearby pipeline for the term of
the power purchase agreement.
On January 21, 1998, the Company announced that it won a bid to acquire for
$109 million the outstanding shares (79.78%) of Compania de Luz Electrica de
Santa Ana (CLESA), an electrical distribution company in El Salvador. These
shares will be purchased from Comision Ejecutiva Hidroelectrica del Rio Lempa
(CEL), a government-owned utility company. Energia Global International, Ltd., a
Bermuda company, with activities in Central America, may purchase up to 20% of
CLESA from AES.
CLESA serves 188,000 customers and borders Guatemala and Honduras to the
north, with access to the Pacific Ocean. Three other distribution companies in
El Salvador were sold in the same auction to two other private companies.
Closing is expected to occur in mid-February 1998.
In November 1997, the Company announced that it won a bid to acquire three
natural gas-fired, electric generating stations from Southern California Edison
for approximately $781 million. The facilities were auctioned as part of
Edison's divestiture of all of its gas-fired generating facilities prior to the
restructuring of California's electricity industry.
The three plants, all located on the southern California coast, are
Alamitos (2083 MW), Redondo Beach (1310 MW) and Huntington Beach (563 MW). Each
of the plants has been designated a "must-run facility" because station output
is critical to maintaining the reliability of electric supply in the region.
Consequently, they initially will operate in part under agreements with the
Independent System Operator being established through electricity restructuring.
Pursuant to California's electricity restructuring law, Edison will remain under
contract to operate and maintain the facilities for two years.
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Completion of the acquisition is subject to a number of conditions,
including the receipt of California Public Utilities Commission approval and
successful implementation of the new California electric spot market, called the
Power Exchange.
On October 21, 1997, a subsidiary of AES was the winning bidder to acquire
approximately 90% of the common shares of Companhia Centro-Oeste de Distribuicao
de Energia Eletrica ("CCODEE"), the distribution company serving the central and
western sections of the State of Rio Grande do Sul in Brazil, for a total
purchase price of approximately $1.37 billion. The acquisition closed on October
27, 1997, at which time the Company financed the payment of the purchase price
with the proceeds of (i) $220 million of revolving credit borrowings under its
$425 million revolving credit facility (the "Revolver") (the commitments under
which had been temporarily increased from $425 million to $600 million), (ii)
$550 million of short term loans under a bridge loan facility (the "CEEE Bridge
Loan") to be provided by affiliates of J.P. Morgan Securities, Inc., Donaldson,
Lufkin & Jenrette Securities Corporation, Salomon Brothers Inc and Unterberg
Harris (each of which was an Initial Purchaser in one or both of the Initial
Offerings referred to below) and (iii) $600 million of non-recourse financing
under a $680 million facility to be provided by BankBoston and ANZ Investment
Bank as co-arrangers (the "CEEE Non-recourse Financing"). AES purchased the
shares of CCODEE from the State of Rio Grande do Sul in a partial privatization
of Companhia Estadual de Energia Eletrica ("CEEE"), the integrated utility of
Rio Grande do Sul. All of the remaining shares of CCODEE may be purchased by its
employees. CCODEE currently serves approximately 800,000 customers or
approximately 31.3% of the population of the State of Rio Grande do Sul on sales
of 5,772 gigawatt hours. The foregoing transaction and the financing described
therein and below are referred to herein as the "CEEE Acquisition". The
Borrowings under the Revolver and the CEEE Bridge Loan were refinanced with the
proceeds of the Initial Offerings. See "Use of Proceeds."
Also in October 1997, a joint venture named Tau Power that is 85% owned by
AES and 15% owned by Israel-based Suntree Power completed the acquisition and
takeover of two hydro-electric stations ("GES") and four combined heat and power
stations ("TETS") in the province of East Kazakhstan. The total electric
capacity of the stations included in the agreement is 1,384 MW, with additional
thermal capacity of over 1,000 MW electric equivalent. The transaction expands
AES's current global portfolio of electric generating facilities, which already
includes the 4,000 MW coal-fired Ekibastuz power station in Kazakhstan. The
power stations included in the agreement signed are: the 332 MW Ust-Kamenogorsk
GES, the 702 MW Shulbinsk GES, the 240 MW Ust-Kamenogorsk TETS, the 50 MW
Leninogorsk TETS, the 50 MW Sogrinsk TETS and the 10 MW Semipalatinsk TETS.
Included in the transaction, AES obtained ownership and control of the retail
sales department of the former utility and will assume the existing power supply
contracts with the 50 largest customers in East Kazakhstan, including the
distribution companies. Tau Power paid $20.7 million for the concession on the
GES, with an additional payment of $2.5 million for the shares of the TETS. The
Company will also repay back wages of approximately $4 million to the workers
during the first year of operation and provide for working capital to finance
the delivery of much needed coal prior to winter and complete winter preparation
plans.
In June 1997, AES together with The Southern Company and The Opportunity
Fund, a Brazilian investment fund, (collectively, the "AES Consortium"),
acquired 14.41% of Companhia Energetica de Minas Gerais ("CEMIG"), an integrated
electric utility serving the State of Minas Gerais in Brazil, for a total
purchase price of approximately $1.056 billion, $654 million of the financing
for which was in the form of non-recourse financing provided by Banco Nacional
de Desenvolvimento Economico e Social ("BNDES"). AES's portion of the purchase
price was approximately $364 million after consideration of the BNDES facility.
The shares of CEMIG, which represent approximately 33% of the voting interest,
have been purchased from the State of Minas Gerais in a partial privatization of
CEMIG. Initially, AES and The Opportunity Fund had a 90.6% and a 9.4% economic
interest in the AES Consortium, respectively. Subsequently, the Southern Company
exercised its option to purchase a 25% interest in the AES Consortium from AES.
Pursuant to a shareholders agreement between the AES Consortium and the State of
Minas Gerais,
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AES will have significant operating influence, including the right to appoint
the chief operating officer of CEMIG, and will otherwise share control of CEMIG
with the State of Minas Gerais. CEMIG owns approximately 5,000 MW of generating
plants and serves approximately 4 million customers. The foregoing transaction
and the financing therefor described below are referred to herein as the "CEMIG
Acquisition".
In June 1997, AES completed its acquisition of the international assets of
Destec Energy, Inc. ("Destec"), a large independent energy producer with
headquarters in Houston, Texas, at a total price to AES of approximately $439
million. Destec's international assets acquired by AES include ownership
interests in the following five electric generating plants (with ownership
percentages in parentheses): (i) a 110 MW gas-fired combined cycle plant in
Kingston, Canada (50%); (ii) a 405 MW gas-fired combined cycle plant in
Terneuzen, Netherlands (50%); (iii) a 140 MW gas-fired simple cycle plant in
Cornwall, England (100%); (iv) a 235 MW oil-fired simple cycle plant in Santo
Domingo, Dominican Republic (99%); and (v) a 1,600 MW coal-fired plant
("Hazelwood") in Victoria, Australia (20%). Each of such plants is currently in
operation, except for the plant in Terneuzen which is under construction. The
acquisition by AES of Destec's international assets also includes Destec's
non-U.S. developmental stage power projects, including projects in Taiwan, the
Philippines, Australia and Argentina. The foregoing transaction and the
financing therefor described below are referred to herein as the "Destec
Acquisition".
In May 1997, a subsidiary of AES, and its partner, Community Energy
Alternatives ("CEA"), acquired an aggregate of 90% (AES acquired 60% and CEA
acquired 30%) of two distribution companies of Empresa Social de Energia de
Buenos Aires S.A. ("ESEBA") serving certain portions of the Province of Buenos
Aires, Argentina for an aggregate purchase price of $565 million. AES's portion
of the purchase price after consideration of non-recourse debt was $244 million.
The remaining 10% is owned by the employees of each of the two acquired
companies. The foregoing transaction is referred to herein as the "ESEBA
Acquisition".
AES funded its acquisition of Destec through cash on hand and borrowings
under the Revolver. The net proceeds of approximately $387 million from the
Company's issuance and sale of its common stock, par value $.01 per share (the
"AES Common Stock"), and $2.6875 Term Convertible Securities, Series A ("Series
A TECONS") in March 1997 was temporarily applied to repay amounts outstanding
under the Revolver. AES financed its acquisitions of CEMIG and ESEBA through:
(i) $450 million in non-recourse bridge financing, comprised of a $250 million
bridge loan (the "CEMIG Bridge") to AES CEMIG Funding Corporation, a
wholly-owned subsidiary of AES, and a $200 million bridge loan (the "ESEBA
Bridge") to AESEBA Funding Corporation, a wholly-owned subsidiary of AES; (ii) a
$200 million subordinated bridge loan to AES (the "AES Bridge Loan"); (iii)
non-recourse project debt; (iv) borrowings under AES's Revolver and (v) cash on
hand.
These projects are subject to a number of risks including those related to
financing, construction and contract compliance, and there can be no assurance
that they will be completed successfully.
Other Events
On February 10, 1998, AES announced that it had sold its 20% interest in
Hazelwood Power Partners to National Power PLC for approximately A$205 million.
Hazelwood Power Partners operates a 1,600 MW coal-fired power plant in Victoria,
Australia. AES had acquired its interest in Hazelwood as part of its acquisition
of the international businesses of Destec Energy, Inc. in June 1997.
In February 1998, AES repaid the remaining balances on both the CEMIG
Bridge and ESEBA Bridge loans through the combination of: (i) the sale of AES's
interest in Hazelwood; (ii) the replacement of cash reserves with a letter of
credit at one of AES's projects and; (iii) borrowings under the Revolver.
On January 9, 1998, the Southern Company exercised its option for
approximately $114 million which was used entirely to partially pay down the
CEMIG Bridge to $106 million.
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In September 1997, AES began construction on the AES Parana project, an 830
MW gas-fired, combined cycle power plant. AES Parana will be located in San
Nicolas, Argentina, adjacent to Central Termica San Nicolas, in which AES owns a
controlling interest. AES Parana is in the final stages of arranging for project
financing for the facility. AES Parana has entered into a lump sum, turnkey
construction contract with Nichimen Corporation and Mitsubishi Heavy Industries
for the plant. A portion of the fuel will be supplied by Total Corporation under
a long term, risk management contract. Project output will be sold into the
Argentine electric market. Total capital cost is estimated at $440 million, and
the project is expected to commence commercial operation in 2000.
Also in September, AES's 100% owned subsidiary, AES Mt. Stuart, raised
A$103.50 million (approximately US$75.5 million) of non-recourse project
financing for its 288 MW kerosene-fired simple cycle power plant in Townsville,
Queensland, Australia. The project debt facility was solely under-written by
Societe Generale Australia Ltd. and is comprised of a 10-year term loan, a
letter of credit facility and a short-term revolving cash advance facility.
Low-cost peaking power from the plant will be sold to the Queensland
Transitional Power Trading Corporation under a 10-year power purchase agreement.
A turnkey construction agreement has been signed with Nichimen Corporation, and
the major equipment will be supplied by Mitsubishi Heavy Industries.
Construction of the plant started during the fourth quarter of 1997 and is
scheduled to be completed on January 1, 1999.
In July 1997, the Company announced a two for one stock split, in the form
of a stock dividend, for holders of record on July 28, 1997 of its Common Stock,
par value $.01 per share, which was paid on August 28, 1997.
In the same month, the Company issued approximately $325 million of senior
subordinated notes due 2007 with an 8 3/8% interest rate per annum in a private
placement. The Company used the net proceeds of approximately $315 million to
repay amounts outstanding under the AES Bridge Loan, to redeem the Company's $75
million 9 3/4% senior subordinated notes due 2000 and to repay pro rata a
portion of the amounts outstanding under the ESEBA Bridge and the CEMIG Bridge.
The ESEBA Bridge and the CEMIG Bridge have been refinanced and are currently
$180 million and $220 million, respectively.
Also in July, the Company sold 4.5 million shares of its common stock (on a
pre-split basis) for gross proceeds of approximately $359 million or $79.75 per
share. The Company used the net proceeds of approximately $350 million to repay
pro rata a portion of the amounts outstanding under the ESEBA Bridge and the
CEMIG Bridge.
Unless otherwise indicated, all share numbers and per share amounts in this
Prospectus have been restated to reflect the stock split.
The pro forma information incorporated by reference in this Prospectus has
been adjusted for the Company's issuance of $325 million aggregate principal
amount of 8 3/8% Senior Subordinated Notes due 2007 and 9 million shares of AES
Common Stock, the redemption of $75 million 9 3/4% Senior Subordinated Notes and
the repayment and reborrowing of the CEMIG Bridge and ESEBA Bridge, in each
case, during the third quarter of 1997 (collectively, the "Third Quarter
Financings"), the CEMIG Acquisition, the Destec Acquisition, the ESEBA
Acquisition, the CEEE Acquisition, and the Original Offering and the concurrent
offering by the Company of $375,000,000 of its Senior Subordinated Notes due
2007 and $125,000,000 of its Senior Subordinated Debentures due 2027
(collectively, the "Initial Offerings") and the application of the net proceeds
therefrom (collectively, the "Adjustments") but does not reflect the sale of the
Company's interest in Hazelwood, the repayment of the CEMIG Bridge and ESEBA
Bridge Loans or the borrowings under the Revolver in February 1998 as described
in "-- Other Events". Complete unaudited pro forma financial information giving
effect to the Adjustments is incorporated by reference to the Company's Current
Report on Form 8-K filed on January 9, 1998.
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TECONS OFFERING
SECURITIES OFFERED..... 6,000,000 $2.75 Term Convertible Securities, Series B
("TECONS" or "Preferred Securities").
ISSUER................... AES Trust II, a Delaware business trust. The sole
assets of the Trust consist of the 5.50% Junior
Subordinated Convertible Debentures due 2012 (the
"Junior Subordinated Debentures") of AES.
GUARANTOR................ The AES Corporation, a Delaware corporation.
DISTRIBUTIONS............ Distributions on the TECONS will accrue from October
29, 1997 and will be payable at an annual rate of
$2.75 per TECONS. Subject to the Distribution
deferral provisions described below, Distributions
will be payable quarterly in arrears on the last day
of each calendar quarter, commencing December 31,
1997. Because Distributions on the TECONS constitute
interest for U.S. federal income tax purposes,
corporate holders thereof will not be entitled to a
dividends-received deduction.
DISTRIBUTION DEFERRAL
PROVISIONS.............. The ability of the Trust to pay Distributions on the
TECONS is solely dependent on the receipt of interest
payments from AES on the Junior Subordinated
Debentures. So long as AES shall not be in default in
the payment of interest on the Junior Subordinated
Debentures, AES has the right to defer payments of
interest on the Junior Subordinated Debentures from
time to time for successive Extension Periods not
exceeding 20 consecutive quarters for each such
period; provided that no such period may extend
beyond the stated maturity of the Junior Subordinated
Debentures. Quarterly Distributions on the TECONS
would be deferred by the Trust (but would continue to
accumulate quarterly and accrue interest) until the
end of any such Extension Period. Upon the
termination of an Extension Period, payment is due on
all accrued and unpaid amounts on the Junior
Subordinated Debentures and upon such payment, the
Trust would be required to pay all accumulated and
unpaid Distributions. AES will give notice of its
deferral of an interest payment to the Trust no later
than ten business days prior to the related record
date (unless the Property Trustee shall be the sole
holder of the Junior Subordinated Debentures, in
which case notice will be given no later than one
business day prior to the earlier of (i) the next
succeeding Interest Payment Date (as defined herein)
or (ii) the date the Company is required to give
notice of the related record date). See "Description
of the TECONS -- Distributions" and "Description of
the Junior Subordinated Debentures -- Option to
Extend Interest Payment Period" and "Risk Factors --
Option to Extend Interest Payment Period; Tax Impact
of Extension." If a deferral of an interest payment
occurs, the holders of the TECONS will continue to
accrue income for U.S. federal income tax purposes in
advance of any corresponding cash Distribution. See
"Certain Federal Tax Consequences -- Accrual of
Original Issue Discount" and "Risk Factors -- Option
to Extend Interest Payment Period; Tax Impact of
Extension."
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RIGHTS UPON DEFERRAL OF
DISTRIBUTIONS........... During any period in which interest payments on the
Junior Subordinated Debentures are deferred, interest
will accrue on the Junior Subordinated Debentures
(compounded quarterly) and quarterly Distributions
will continue to accumulate with interest thereon (to
the extent permitted by applicable law) at the
Distribution rate, compounded quarterly. AES has
agreed, among other things, not to declare or pay any
dividend on its common stock or preferred stock or
make any guarantee payments with respect thereto
during any Extension Period, provided that the
foregoing shall not apply to any stock dividends
payable in AES Common Stock. See "Description of the
Junior Subordinated Debentures -- Option to Extend
Interest Payment Period" and "Risk Factors -- Option
to Extend Interest Payment Period; Tax Impact of
Extension."
CONVERSION RIGHTS....... Each TECONS is convertible at any time prior to the
close of business on September 30, 2012 (or, in the
case of TECONS called for redemption, prior to the
close of business on the Business Day (as defined
herein) prior to the applicable redemption date) at
the option of the holder into shares of AES Common
Stock, at the rate of 0.8914 shares of AES Common
Stock for each TECONS (equivalent to a conversion
price of $56.09 per share of AES Common Stock),
subject to adjustment in certain circumstances. The
reported last sale price of AES Common Stock on the
NYSE Composite Tape on February 10, 1998 was $41.25
per share. In connection with any conversion of a
TECONS, the Conversion Agent (as defined herein) will
exchange such TECONS for the appropriate principal
amount of the Junior Subordinated Debentures held for
the Trust and immediately convert such Junior
Subordinated Debentures into AES Common Stock. No
fractional shares of AES Common Stock will be issued
as a result of conversion, but in lieu thereof such
fractional interest will be paid by AES in cash. See
"Description of the TECONS -- Conversion Rights."
LIQUIDATION AMOUNT...... In the event of any liquidation of the Trust, holders
will be entitled to receive $50 per TECONS plus an
amount equal to any accrued and unpaid Distributions
thereon to the date of payment, unless Junior
Subordinated Debentures are distributed to such
holders. See "Description of the TECONS --
Liquidation Distribution Upon Dissolution."
REDEMPTION............... The Junior Subordinated Debentures will be redeemable
for cash, at the option of the Company, in whole or
in part, from time to time on or after September 30,
2000 at the prices specified herein or at any time in
certain circumstances upon the occurrence of a Tax
Event at a redemption price equal to 100% of the
principal amount to be redeemed plus any accrued and
unpaid interest thereon, including Compounded
Interest, if any, to the date of redemption. If the
Company redeems Junior Subordinated Debentures, the
Trust must redeem, at the Redemption Price, Trust
Securities having an aggregate liquidation amount
equal to the aggregate principal amount of the
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Junior Subordinated Debentures so redeemed. The
TECONS will not have a stated maturity date, although
they will be subject to mandatory redemption upon the
repayment of the Junior Subordinated Debentures at
their stated maturity (September 30, 2012), upon
acceleration, earlier redemption or otherwise. See
"Description of the TECONS -- Mandatory Redemption"
and "Description of the Junior Subordinated
Debentures -- Optional Redemption."
GUARANTEE................ AES will irrevocably and unconditionally guarantee,
on a subordinated basis and to the extent set forth
herein, the payment in full of (i) any accrued and
unpaid Distributions and the amount payable upon
redemption of the TECONS to the extent AES has made a
payment to the Property Trustee of interest or
principal on the Junior Subordinated Debentures and
(ii) generally, the liquidation amount of the TECONS
to the extent the Trust has assets available for
distribution to holders of TECONS. The Guarantee will
be unsecured and will be subordinate and junior in
right of payment to all other liabilities of AES and
will rank pari passu in right of payment with the
most senior preferred stock issued, from time to
time, if any, by AES. See "Description of the
Guarantee."
VOTING RIGHTS........... Generally, holders of the TECONS will not have any
voting rights. If (i) the Property Trustee fails to
enforce its rights under the Junior Subordinated
Debentures or (ii) the Guarantee Trustee (as defined
herein) fails to enforce its rights under the
Guarantee, a record holder of the TECONS may
institute a legal proceeding directly against AES to
enforce such rights without first instituting any
legal proceeding against any other person or entity.
Notwithstanding the foregoing, if an Indenture Event
of Default (as defined herein) occurs and is
continuing and is attributable to the failure of AES
to pay interest or principal on the Junior
Subordinated Debentures or AES has failed to make a
Guarantee Payment (as defined herein), a holder of
the TECONS may directly institute a proceeding
against AES for enforcement of such payment. See
"Description of the TECONS -- Voting Rights" and "--
Declaration Events of Default."
SPECIAL EVENT DISTRIBUTION;
TAX EVENT REDEMPTION.... Upon the occurrence of a Special Event (as defined
herein), except in certain limited circumstances, AES
may cause the Trust to be dissolved and cause the
Junior Subordinated Debentures to be distributed to
the holders of the TECONS. In the case of a Tax Event
(as defined herein), AES may also elect to cause the
TECONS to remain outstanding and pay Additional
Interest (as defined herein), if any, on the Junior
Subordinated Debentures. In certain circumstances
upon the occurrence of a Tax Event, the Junior
Subordinated Debentures may be redeemed by AES at
100% of the principal amount thereof plus accrued and
unpaid interest thereon. See "Description of the
TECONS -- Special Event Redemption or Distribution."
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JUNIOR SUBORDINATED
DEBENTURES OF AES....... The Junior Subordinated Debentures will mature on
September 30, 2012 and will bear interest at the rate
of 5.50% per annum, payable quarterly in arrears. So
long as AES shall not be in default in the payment of
interest on the Junior Subordinated Debentures, AES
has the right to defer payments of interest on the
Junior Subordinated Debentures from time to time for
successive periods not exceeding 20 consecutive
quarters for each such period; provided that no such
period may extend beyond the stated maturity of the
Junior Subordinated Debentures. Prior to the
termination of any Extension Period, AES may pay all
or a portion of the accrued Distributions or may
further defer interest payments provided the
Extension Period, as previously and further extended,
does not exceed 20 consecutive quarters. During any
Extension Period no interest shall be due, but such
interest shall continue to accrue and compound
quarterly. Upon termination of the Extension Period,
payment is due on all accrued and unpaid amounts.
After the payment of all amounts then due, AES may
commence a new Extension Period, subject to the
conditions of this paragraph. During any Extension
Period, AES will be prohibited from paying dividends
on any of its common stock or preferred stock or
making any guarantee payments with respect thereto;
provided that the foregoing shall not apply to any
stock dividends payable in Common Stock. The payment
of principal and interest on the Junior Subordinated
Debentures will be subordinated in right of payment
to all present and future Senior and Subordinated
Debt of AES. In addition, payment of principal and
interest on the Junior Subordinated Debentures will
be structurally subordinated to the liabilities of
AES' subsidiaries. As of September 30, 1997, on a pro
forma basis after giving effect to the Adjustments,
the Company had $1.3 billion of Senior and
Subordinated Debt (which includes letters of credit)
outstanding. In addition, on a pro forma basis after
given effect to the Adjustments, the Company's
subsidiaries had debt of $4.0 billion, to which the
Junior Subordinated Debentures are effectively
subordinated. The Indenture (as defined herein),
under which the Junior Subordinated Debentures will
be issued, does not limit the aggregate amount of
Senior and Subordinated Debt that may be incurred by
AES and does not limit the liabilities of the
Company's subsidiaries. The Junior Subordinated
Debentures will have provisions with respect to
interest, optional redemption and conversion into AES
Common Stock and certain other terms substantially
similar or analogous to those of the TECONS. See
"Description of the Junior Subordinated Debentures"
and "Risk Factors -- Leverage and Subordination."
USE OF PROCEEDS........ There will be no proceeds to the Company or the Trust
from the sale of TECONS pursuant to this Prospectus.
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<PAGE>
BOOK-ENTRY; DELIVERY AND
FORM.................... TECONS sold in reliance on Rule 144A are represented
by a single permanent global TECONS certificate
registered in the name of a nominee of DTC. TECONS
sold in offshore transactions in reliance on
Regulation S under the Securities Act are represented
by a single, permanent global TECONS in definitive,
fully registered form deposited with the Property
Trustee, as custodian for, and registered in the name
of, DTC for the accounts of Morgan Guaranty Trust
Company of New York, Brussels office, as operator of
the Euroclear System ("Euroclear"), and Cedel Bank,
S.A. ("Cedel"). TECONS resold under this Prospectus
will be represented by a single permanent global
TECONS certificate registered in the name of a
nominee of DTC. See "Description of the TECONS --
Book Entry; Delivery and Form" and "-- The Global
TECONS." Institutional Accredited Investors who are
not Qualified Institutional Buyers and who do not
purchase TECONS under this Prospectus will receive
certificates for the TECONS owned by them, which
cannot thereby be traded through the facilities of
DTC, except in connection with a transfer to a
Qualified Institutional Buyer or a transfer pursuant
to Regulation S.
RISK FACTORS
Prospective purchasers of the TECONS should carefully consider the specific
matters set forth under "Risk Factors" as well as the other information and data
included, or incorporated by reference, in this Prospectus prior to making an
investment in the TECONS.
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RISK FACTORS
Prospective purchasers of the TECONS should read this entire Prospectus
carefully. The following factors should be considered carefully in evaluating
AES and its business before purchasing the TECONS offered by this Prospectus.
LEVERAGE AND SUBORDINATION
The Company and its subsidiaries had approximately $3.9 billion of
outstanding indebtedness at September 30, 1997. As a result of the Company's
level of debt, the Company might be significantly limited in its ability to meet
its debt service obligations, to finance the acquisition and development of
additional projects, to compete effectively or to operate successfully under
adverse economic conditions. As of September 30, 1997, the Company had a
consolidated ratio of total debt to total book capitalization (including current
debt) of approximately 70%.
The Junior Subordinated Debentures will be subordinated to all Senior and
Subordinated Debt including, but not limited to, the Company's $600 million
Revolver. The obligations of AES under the Guarantee are subordinate and junior
in right of payment to all liabilities of AES and pari passu in right of payment
with the most senior preferred stock issued, from time to time, if any, by AES.
As of September 30, 1997, on a pro forma basis after giving effect to the
Adjustments, the Company had approximately $1.3 billion in aggregate principal
amount of Senior and Subordinated Debt.
Upon any payment or distribution of assets to creditors upon any
liquidation, dissolution, winding up, receivership, reorganization, assignment
for the benefit of creditors, marshaling of assets and liabilities or any
bankruptcy, insolvency or similar proceedings of the Company, the holders of
Senior and Senior Subordinated Debt will first be entitled to receive payment in
full of all amounts due or to become due under all Senior and Subordinated Debt
before the holders of the Junior Subordinated Debentures will be entitled to
receive any payment in respect of the principal of, premium, if any, or interest
on such Junior Subordinated Debentures. No payments on account of principal,
premium, if any, or interest in respect of the Junior Subordinated Debentures
may be made if there shall have occurred and be continuing a default in any
payment under any Senior and Senior Subordinated Debt or during certain periods
when an event of default under certain Senior and Subordinated Debt permits the
lenders thereunder to accelerate the maturing of such Senior and Senior
Subordinated Debt. See "Description of Junior Subordinated Debentures --
Subordination." The Guarantee will rank (i) subordinate and junior in right of
payment to all other liabilities of the Company, including the Junior
Subordinated Debentures, except those made pari passu or subordinate by their
terms and (ii) pari passu in right of payment with the most senior preferred
stock issued, from time to time, if any, by the Company. See "Description of the
Guarantee."
The Junior Subordinated Debentures will be effectively subordinated to the
indebtedness and other obligations (including trade payables) of the Company's
subsidiaries. At September 30, 1997, on a pro forma basis after giving effect to
the Adjustments, the indebtedness and obligations of the Company's subsidiaries
aggregated approximately $4.0 billion. The ability of the Company to pay
principal of, premium, if any, and interest on the Junior Subordinated
Debentures will be dependent upon the receipt of funds from its subsidiaries by
way of dividends, fees, interest, loans or otherwise. There are no terms in the
Junior Subordinated Debentures, the TECONS or the Guarantee that limit the
Company's or its subsidiaries' ability to incur additional indebtedness. Most of
the Company's subsidiaries with interests in power generation facilities
currently have in place arrangements that restrict their ability to make
distributions to the Company by way of dividends, fees, interest, loans or
otherwise. The Company's subsidiaries are separate and distinct legal entities
and have no obligation, contingent or otherwise, to pay any amounts due pursuant
to the Junior Subordinated Debentures or the TECONS or to make any funds
available therefor, whether by dividends, loans or other payments, and do not
guarantee the payment of interest on or principal of the Junior Subordinated
Debentures or the TECONS. Any right of the Company to receive any assets of any
of its subsidiaries upon any liquidation, dissolution, winding up, receivership,
reorganization, assignment for the benefit of creditors, marshaling of assets
and liabilities or any bankruptcy, insolvency or similar proceedings of the
Company (and the consequent right of the holders of the Junior Subordinated
Debentures and the TECONS to participate in the distribution
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of, or to realize proceeds from, those assets) will be effectively subordinated
to the claims of any such subsidiary's creditors (including trade creditors and
holders of debt issued by such subsidiary). The Company currently conducts
substantially all of its operations through its subsidiaries. See "Description
of the Guarantee" and "Description of the Junior Subordinated Debentures --
Subordination."
DOING BUSINESS OUTSIDE THE UNITED STATES
The Company's involvement in the development of new projects and the
acquisition of existing plants in locations outside the United States is
increasing and most of the Company's current development and acquisition
activities are for projects and plants outside the United States. The Company,
through subsidiaries, affiliates and joint ventures, has ownership interests in
75 power plants outside the United States in operation or under construction.
Thirty-nine of such power plants are located in Brazil; nine in the People's
Republic of China; seven in Kazakhstan; six in Argentina; five in the United
Kingdom; three in Hungary; two in Pakistan; and one in each of the Netherlands,
Canada, Australia and the Dominican Republic.
The financing, development and operation of projects outside the United
States entail significant political and financial uncertainties (including,
without limitation, uncertainties associated with first-time privatization
efforts in the countries involved, currency exchange rate fluctuations, currency
repatriation restrictions, currency inconvertibility, political instability,
civil unrest, and expropriation) and other credit quality, liquidity or
structural issues that have the potential to cause substantial delays in respect
of or material impairment of the value of the project being developed or
operated, which AES may not be capable of fully insuring or hedging against. The
ability to obtain financing on a commercially acceptable non-recourse basis in
developing nations may also require higher investments by the Company than
historically have been the case. In addition, financing in countries with less
than investment grade sovereign credit ratings may also require substantial
participation by multilateral financing agencies. There can be no assurance that
such financing can be obtained when needed.
The uncertainty of the legal environment in certain countries in which the
Company, its subsidiaries and its affiliates are or in the future may be
developing, constructing or operating could make it more difficult for the
Company to enforce its respective rights under agreements relating to such
projects. In addition, the laws and regulations of certain countries may limit
the Company's ability to hold a majority interest in some of the projects that
it may develop or acquire. International projects owned by the Company may, in
certain cases, be expropriated by applicable governments. Although AES may have
legal recourse in enforcing its rights under agreements and recovering damages
for breaches thereof, there can be no assurance that any such legal proceedings
will be successful.
COMPETITION
The global power production market is characterized by numerous strong and
capable competitors, many of whom may have extensive and diversified
developmental or operating experience (including both domestic and international
experience) and financial resources similar to or greater than the Company.
Further, in recent years, the power production industry has been characterized
by strong and increasing competition with respect to both obtaining power sales
agreements and acquiring existing power generation assets. In certain markets,
these factors have caused reductions in prices contained in new power sales
agreements and, in many cases, have caused higher acquisition prices for
existing assets through competitive bidding practices. The evolution of
competitive electricity markets and the development of highly efficient
gas-fired power plants have also caused, or are anticipated to cause, price
pressure in certain power markets where the Company sells or intends to sell
power. There can be no assurance that the foregoing competitive factors will not
have a material adverse effect on the Company.
DEVELOPMENT UNCERTAINTIES
The majority of the projects that AES develops are large and complex and
the completion of any such project is subject to substantial risks. Development
can require the Company to expend significant sums for preliminary engineering,
permitting, legal and other expenses in preparation for competitive
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bids which the Company may not win or before it can be determined whether a
project is feasible, economically attractive or capable of being financed.
Successful development and construction is contingent upon, among other things,
negotiation on terms satisfactory to the Company of engineering, construction,
fuel supply and power sales contracts with other project participants, receipt
of required governmental permits and consents and timely implementation and
satisfactory completion of construction. There can be no assurance that AES will
be able to obtain new power sales contracts, overcome local opposition, if any,
obtain the necessary site agreements, fuel supply and ash disposal agreements,
construction contracts, steam sales contracts, licenses and certifications,
environmental and other permits and financing commitments necessary for the
successful development of its projects. There can be no assurance that
development efforts on any particular project, or the Company's efforts
generally, will be successful. If these development efforts are not successful,
the Company may abandon a project under development. At the time of abandonment,
the Company would expense all capitalized development costs incurred in
connection therewith and could incur additional losses associated with any
related contingent liabilities. The future growth of the Company is dependent,
in part, upon the demand for significant amounts of additional electrical
generating capacity and its ability to obtain contracts to supply portions of
this capacity. Any material unremedied delay in, or unsatisfactory completion
of, construction of the Company's projects could, under certain circumstances,
have an adverse effect on the Company's ability to meet its obligations,
including the payment of principal of, premium, if any and interest on the
Notes. The Company also is faced with certain development uncertainties arising
out of doing business outside of the United States. See "-- Doing Business
Outside the United States."
RISKS ASSOCIATED WITH ACQUISITIONS
The Company has achieved a significant portion of its growth through
acquisitions and expects that it will continue to grow, in part, through
acquisitions. During 1997 alone the Company consummated the ESEBA Acquisition,
the Destec Acquisition, the CEMIG Acquisition and the CEEE Acquisition in which
the Company invested an aggregate of approximately $1.9 billion (excluding
non-recourse debt). Although each of the acquired businesses had a significant
operating history at the time of its acquisition by the Company, the Company has
a limited history of owning and operating these businesses. In addition, most of
these businesses were government owned and some were operated as part of a
larger integrated utility prior to their acquisition by the Company. There can
be no assurances that the Company will be successful in transitioning these to
private ownership, that such businesses will perform as expected or that the
returns from such businesses will support the indebtedness incurred to acquire
them or the capital expenditures needed to develop them.
UNCERTAINTY OF ACCESS TO CAPITAL FOR FUTURE PROJECTS
Each of AES's projects under development and those independent power supply
businesses it may seek to acquire may require substantial capital investment.
Continued access to capital with acceptable terms is necessary to assure the
success of future projects and acquisitions. AES has substantially utilized
project financing loans to fund the capital expenditures associated with
constructing and acquiring its electric power plants and related assets. Project
financing borrowings have been substantially non-recourse to other subsidiaries
and affiliates and to AES as the parent company and are generally secured by the
capital stock, physical assets, contracts and cash flow of the related project
subsidiary or affiliate. The Company intends to continue to seek, where
possible, such non-recourse project financing in connection with the assets
which the Company or its affiliates may develop, construct or acquire. However,
depending on market conditions and the unique characteristics of individual
projects, such financing may not be available or the Company's traditional
providers of project financing, particularly multinational commercial banks, may
seek higher borrowing spreads and increased equity contributions.
Furthermore, because of the reluctance of commercial lending institutions
to provide non-recourse project financing (including financial guarantees) in
certain less developed economies, the Company, in such locations, has and will
continue to seek direct or indirect (through credit support or guarantees)
project financing from a limited number of multilateral or bilateral
international financial institutions or agencies. As a precondition to making
such project financing available, these institutions may also re-
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quire governmental guarantees of certain project and sovereign related risks.
Depending on the policies of specific governments, such guarantees may not be
offered and as a result, AES may determine that sufficient financing will
ultimately not be available to fund the related project.
In addition to the project financing loans, if available, AES provides a
portion, or in certain instances all, of the remaining long-term financing
required to fund development, construction, or acquisition. These investments
have generally taken the form of equity investments or loans, which are
subordinated to the project financing loans. The funds for these investments
have been provided by cash flows from operations and by the proceeds from
borrowings under the short-term credit facilities and issuances of senior
subordinated notes, convertible debentures and common stock of the Company.
The Company's ability to arrange for financing on either a fully recourse
or a substantially non-recourse basis and the costs of such capital are
dependent on numerous factors, including general economic and capital market
conditions, the availability of bank credit, investor confidence in the Company,
the continued success of current projects and provisions of tax and securities
laws which are conducive to raising capital in this manner. Should future access
to capital not be available, AES may decide not to build new plants or acquire
existing facilities. While a decision not to build new plants or acquire
existing facilities would not affect the results of operations of AES on its
currently operating facilities or facilities under construction, such a decision
would affect the future growth of AES.
DEPENDENCE ON UTILITY CUSTOMERS AND CERTAIN PROJECTS
The nature of most of AES's power projects is such that each facility
generally relies on one power sales contract with a single customer for the
majority, if not all, of its revenues over the life of the power sales contract.
During 1996, five customers, including CL&P, a subsidiary of Northeast
Utilities, accounted for 73% of the Company's consolidated total revenues. The
prolonged failure of any one utility customer to fulfill its contractual
obligations could have a substantial negative impact on AES's primary source of
revenues. AES has sought to reduce this risk in part by entering into power
sales contracts with utilities or other customers of strong credit quality and
by locating its plants in different geographic areas in order to mitigate the
effects of regional economic downturns.
Four of the Company's plants collectively represented approximately 39% of
AES's consolidated total assets at December 31, 1996 and generated approximately
67% of AES's consolidated total revenues for the year ended December 31, 1996.
Sales to Connecticut Light & Power Company ("CL&P") represented 16% of the
Company's total revenues in 1996. Moody's Investor Service Inc. ("Moody's") and
Standard & Poor's Corporation ("S&P") have recently downgraded CL&P's senior
secured long-term debt from Baa3/BBB- to Ba2/ BB, and S&P has placed CL&P on
watch for possible downgrade. As a result of regulatory action by the Public
Service Commission of New Hampshire, Moody's and S&P recently downgraded the
senior unsecured debt of Northeast Utilities, the parent of CL&P, from Ba2/BB to
B1/B+ and S&P has placed Northeast Utilities on watch for possible downgrade.
REGULATORY UNCERTAINTY
AES's cogeneration operations in the United States are subject to the
provisions of various laws and regulations, including the Public Utility
Regulatory Policies Act of 1978, as amended ("PURPA") and the Public Utility
Holding Company Act of 1935, as amended ("PUHCA"). PURPA provides to qualifying
facilities ("QFs") certain exemptions from substantial federal and state
legislation, including regulation as public utilities. PUHCA regulates public
utility holding companies and their subsidiaries. AES is not and will not be
subject to regulation as a holding company under PUHCA as long as the domestic
power plants it owns are QFs under PURPA. QF status is conditioned on meeting
certain criteria, and would be jeopardized, for example, by the loss of a steam
customer. The Company believes that, upon the occurrence of an event that would
threaten the QF status of one of its domestic plants, it would be able to react
in a manner that would avoid the loss of QF status (such as by replacing the
steam customer). In the event the Company were unable to avoid the loss of such
status for one of its plants, to avoid public utility holding company status,
AES could apply to the Federal Energy Regula-
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tory Commission ("FERC") to obtain status as an Exempt Wholesale Generator
("EWG"), or could restructure the ownership of the project subsidiary. EWGs,
however, are subject to broader regulation by FERC and may be subject to state
public utility commissions regulation regarding non-rate matters. In addition,
any restructuring of a project subsidiary could result in, among other things, a
reduced financial interest in such subsidiary, which could result in a gain or
loss on the sale of the interest in such subsidiary, the removal of such
subsidiary from the consolidated income tax group or the consolidated financial
statements of the Company, or an increase or decrease in the results of
operations of the Company.
The United States Congress is considering proposed legislation which would
repeal PURPA entirely, or at least repeal the obligation of utilities to
purchase from QFs. There is strong support for grandfathering existing QF
contracts if such legislation is passed, and also support for requiring
utilities to conduct competitive bidding for new electric generation if the
PURPA purchase obligation is eliminated. Various bills have also proposed repeal
of PUHCA. Repeal of PUHCA would allow both independents and vertically
integrated utilities to acquire retail utilities in the United States that are
geographically widespread, as opposed to the current limitations of PUHCA which
require that retail electric systems be capable of physical integration. In
addition, registered holding companies would be free to acquire non-utility
businesses, which they may not do now, with certain limited exceptions. In the
event of a PUHCA repeal, competition for independent power generators from
vertically integrated utilities would likely increase. Repeal of PURPA and/or
PUHCA may or may not be part of comprehensive legislation to restructure the
electric utility industry, allow retail competition, and deregulate most
electric rates. The effect of any such repeal cannot be predicted, although any
such repeal could have a material adverse effect on the Company.
ELECTRIC UTILITY INDUSTRY RESTRUCTURING PROPOSALS
The FERC and many state utility commissions are currently studying a number
of proposals to restructure the electric utility industry in the United States.
Such restructuring would permit utility customers to choose their utility
supplier in a competitive electric energy market. The FERC issued a final rule
in April 1996 which requires utilities to offer wholesale customers and
suppliers open access on utility transmission lines, on a comparable basis to
the utilities' own use of the lines. The final rule is subject to rehearing and
may become the subject of court litigation. Many utilities have already filed
"open access" tariffs. The utilities contend that they should recover from
departing customers their fixed costs that will be "stranded" by the ability of
their wholesale customers (and perhaps eventually, their retail customers) to
choose new electric power suppliers. The FERC final rule endorses the recovery
of legitimate and verifiable "stranded costs." These may include the costs
utilities are required to pay under many QF contracts which the utilities view
as excessive when compared with current market prices. Many utilities are
therefore seeking ways to lower these contract prices or rescind the contracts
altogether, out of concern that their shareholders will be required to bear all
or part of such "stranded" costs. Some utilities have engaged in litigation
against QFs to achieve these ends.
In addition, future United States electric rates may be deregulated in a
restructured United States electric utility industry and increased competition
may result in lower rates and less profit for United States electricity sellers.
Falling electricity prices and uncertainty as to the future structure of the
industry is inhibiting United States utilities from entering into long-term
power purchase contracts. The effect of any such restructuring on the Company
cannot be predicted, although any such restructuring could have a material
adverse effect on the Company.
LITIGATION AND REGULATORY PROCEEDINGS
From time to time, the Company and its affiliates are parties to litigation
and regulatory proceedings. Investors should review the descriptions of such
matters contained in the Company's Annual, Quarterly and Current Reports filed
with the Commission and incorporated by reference herein. There can be no
assurances that the outcome of such matters will not have a material adverse
effect on the Company.
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BUSINESS SUBJECT TO STRINGENT ENVIRONMENTAL REGULATIONS
AES's activities are subject to stringent environmental regulation by
federal, state, local and foreign governmental authorities. For example, the
Clean Air Act Amendments of 1990 impose more stringent standards than those
previously in effect, and require states to impose permit fees on certain
emissions. Congress and other foreign governmental authorities also may consider
proposals to restrict or tax certain emissions. These proposals, if adopted,
could impose additional costs on the operation of AES's power plants. There can
be no assurance that AES would be able to recover all or any increased costs
from its customers or that its business, financial condition or results of
operations would not be materially and adversely affected by future changes in
domestic or foreign environmental laws and regulations. The Company has made and
will continue to make capital and other expenditures to comply with
environmental laws and regulations. There can be no assurance that such
expenditures will not have a material adverse effect on the Company's financial
statements.
CONTROL BY EXISTING STOCKHOLDERS
As of September 30, 1997, AES's two founders, Roger W. Sant and Dennis W.
Bakke, and their immediate families together owned beneficially approximately
22.1% of the outstanding AES Common Stock. As a result of their ownership
interests, Messrs. Sant and Bakke may be able to significantly influence or
exert control over the affairs of AES, including the election of the Company's
directors. As of September 30, 1997, all of AES's officers and directors and
their immediate families together owned beneficially approximately 29.2% of the
outstanding AES Common Stock. To the extent that they decide to vote together,
these stockholders would be able to significantly influence or control the
election of AES's directors, the management and policies of AES and any action
requiring stockholder approval, including significant corporate transactions.
ADHERENCE TO AES'S PRINCIPLES -- POSSIBLE IMPACT ON RESULTS OF OPERATIONS
A core part of AES's corporate culture is a commitment to "shared
principles": to act with integrity, to be fair, to have fun and to be socially
responsible. The Company seeks to adhere to these principles not as a means to
achieve economic success, but because adherence is a worthwhile goal in and of
itself. However, if the Company perceives a conflict between these principles
and profits, the Company will try to adhere to its principles -- even though
doing so might result in diminished or foregone opportunities or financial
benefits.
RISK OF FRAUDULENT TRANSFER
Various fraudulent conveyance laws have been enacted for the protection of
creditors and may be applied by a court on behalf of any unpaid creditor or a
representative of AES's creditors in a lawsuit to subordinate or avoid the
Junior Subordinated Debentures in favor of other existing or future creditors of
AES. Under applicable provisions of the U.S. Bankruptcy code or comparable
provisions of state fraudulent transfer or conveyance laws, if AES at the time
of issuance of the Junior Subordinated Debentures, (i) incurred such
indebtedness with intent to hinder, delay or defraud any present or future
creditor of AES or contemplated insolvency with a design to prefer one or more
creditors to the exclusion in whole or in part of others or (ii) received less
than reasonably equivalent value or fair consideration for issuing the Junior
Subordinated Debentures and AES (a) was insolvent, (b) was rendered insolvent by
reason of the issuance of the Junior Subordinated Debentures, (c) was engaged or
about to engage in business or a transaction for which the remaining assets of
AES constitute unreasonably small capital to carry on its business or (d)
intended to incur, or believed that it would incur, debts beyond its ability to
pay such debts as they mature, then, in each case, a court of competent
jurisdiction could void, in whole or in part, the Junior Subordinated
Debentures. Among other things, a legal challenge of the Junior Subordinated
Debentures on fraudulent conveyance grounds may focus on the benefits, if any,
realized by AES as a result of the issuance by AES of the Junior Subordinated
Debentures.
The measure of insolvency for purposes of the foregoing will vary depending
upon the law applied in such case. Generally, however, AES would be considered
insolvent if the sum of its debts, including contingent liabilities, were
greater than all of its assets at fair valuation or if the present fair market
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value of its assets were less than the amount that would be required to pay the
probable liability on its existing debts, including contingent liabilities, as
they become absolute and mature. There can be no assurance that, after providing
for all prior claims, there will be sufficient assets to satisfy the claims of
the holders of the Junior Subordinated Debentures.
Management believes that, for purposes of all such insolvency, bankruptcy
and fraudulent transfer or conveyance laws, the Junior Subordinated Debentures
are being incurred without the intent to hinder, delay or defraud creditors and
for proper purposes and in good faith, and that AES after the issuance of the
Junior Subordinated Debentures will be solvent, will have sufficient capital for
carrying on its business and will be able to pay its debts as they mature. There
can be no assurance, however, that a court passing on such questions would agree
with management's view.
ABILITY OF AES TRUST TO MAKE DISTRIBUTIONS
The ability of AES Trust to make distributions and other payments on the
TECONS is solely dependent upon the Company making interest and other payments
on the Junior Subordinated Debentures deposited as trust assets as and when
required. If the Company were not to make distributions or other payments on the
Junior Subordinated Debentures for any reason, including as a result of the
Company's election to defer the payment of interest on the Junior Subordinated
Debentures by extending the interest period on the Junior Subordinated
Debentures, AES Trust will not make payments on the Trust Securities. In such an
event, holders of the TECONS would not be able to rely on the Guarantee since
distributions and other payments on the TECONS are subject to the Guarantee only
if and to the extent that the Company has made a payment to the Property Trustee
of interest or principal on the Junior Subordinated Debentures deposited in the
Trust as trust assets. Instead, holders of TECONS would rely on the enforcement
by the Property Trustee of its rights as registered holder of the Junior
Subordinated Debentures against the Company pursuant to the terms of the
Indenture (as defined herein). However, if the Trust's failure to make
distributions on the TECONS is a consequence of the Company's exercise of its
right to extend the interest payment period for the Junior Subordinated
Debentures, the Property Trustee will have no right to enforce the payment of
distributions on the TECONS until an Event of Default (as defined herein) under
the Declaration (as defined herein) shall have occurred.
The Declaration provides that the Company shall pay for all debts and
obligations (other than with respect to the Trust Securities) and all costs and
expenses of AES Trust, including any taxes and all costs and expenses with
respect thereto, to which the Trust may become subject, except for United States
withholding taxes. No assurance can be given that the Company will have
sufficient resources to enable it to pay such debts, obligations, costs and
expenses on behalf of the Trust.
OPTION TO EXTEND INTEREST PAYMENT PERIOD; TAX IMPACT OF EXTENSION
So long as the Company shall not be in default in the payment of interest
on the Junior Subordinated Debentures, the Company has the right under the
Indenture to defer payments of interest on the Junior Subordinated Debentures by
extending the interest payment period from time to time on the Junior
Subordinated Debentures for an extension period not exceeding 20 consecutive
quarterly interest periods (an "Extension Period"), during which no interest
shall be due and payable. In such an event, quarterly distributions on the
TECONS would not be made by the Trust during any such Extension Period. If the
Company exercises the right to extend an interest payment period, the Company
may not during such Extension Period declare or pay dividends on, or redeem,
purchase, acquire or make a distribution or liquidation payment with respect to,
any of its common stock or preferred stock; provided that (i) the Company will
be permitted to pay accrued dividends upon the exchange or redemption of any
series of preferred stock of the Company as may be outstanding from time to
time, in accordance with the terms of such stock and (ii) the foregoing will not
apply to stock dividends paid by the Company. Under the Amended and Restated
Certificate of Incorporation the Company is authorized to issue up to 50,000,000
shares of preferred stock. As of September 30, 1997, no shares of the Company's
preferred stock were outstanding. The Company may from time to time offer shares
of its preferred stock to the public.
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Prior to the termination of any Extension Period, the Company may further
extend such Extension Period; provided that such Extension Period together with
all such previous and further extensions thereof may not exceed 20 consecutive
quarterly interest periods. Upon the termination of any Extension Period and the
payment of all amounts then due, the Company may commence a new Extension
Period, subject to the above requirements. The Company may also prepay at any
time all or any portion of the interest accrued during an Extension Period.
Consequently, there could be multiple Extension Periods of varying lengths
throughout the term of the Junior Subordinated Debentures, not to exceed 20
consecutive quarters or to cause any extension beyond the maturity of the Junior
Subordinated Debentures.
Because the Company has the right to extend the interest payment period for
an Extension Period of up to 20 consecutive quarterly interest periods on
various occasions, the Junior Subordinated Debentures will be treated as issued
with "original issue discount" for United States federal income tax purposes. As
a result, holders of TECONS will be required to include their pro rata share of
original issue discount in gross income as it accrues for United States federal
income tax purposes in advance of the receipt of cash. Generally, all of a
securityholder's taxable interest income with respect to the Junior Subordinated
Debentures will be accounted for as "original issue discount" and actual
distributions of stated interest will not be separately reported as taxable
income.
SPECIAL EVENT REDEMPTION OR DISTRIBUTION
Upon the occurrence and during the continuation of a Tax Event or
Investment Company Event (each as defined herein), which may occur at any time,
the Trust shall, unless the Junior Subordinated Debentures are redeemed in the
limited circumstances described below, be dissolved with the result that Junior
Subordinated Debentures having an aggregate principal amount equal to the
aggregate stated liquidation amount of, and bearing accrued and unpaid
distributions on, the TECONS and Common Securities would be distributed on a Pro
Rata Basis (as defined herein) to the holders of the TECONS and Common
Securities in liquidation of such Trust. In the case of a Tax Event, in certain
circumstances, the Company shall have the right to redeem at any time the Junior
Subordinated Debentures in whole or in part, in which event the Trust will
redeem TECONS and Common Securities on a Pro Rata Basis to the same extent as
the Junior Subordinated Debentures are redeemed. There can be no assurance as to
the market prices for TECONS or the Junior Subordinated Debentures which may be
distributed in exchange for TECONS if a dissolution and liquidation of the Trust
were to occur. Accordingly, the TECONS that an investor may purchase, or the
Junior Subordinated Debentures that the investor may receive on dissolution and
liquidation of the Trust, may trade at a discount to the price that the investor
paid to purchase the TECONS offered hereby. Because holders of TECONS may
receive Junior Subordinated Debentures upon the occurrence of a Special Event
(as defined herein), prospective purchasers of TECONS are also making an
investment decision with regard to the Junior Subordinated Debentures and should
carefully review all the information regarding the Junior Subordinated
Debentures.
There can be no assurance that future federal legislation will not prevent
the Company from deducting interest on the Junior Subordinated Debentures. This
would constitute a Tax Event and could result in the distribution of any Junior
Subordinated Debentures to holders of the TECONS or, in certain circumstances,
the redemption of such securities by the Company and the distribution of the
resulting cash in redemption of the TECONS.
"Tax Event" means that the Regular Trustees (as defined herein) shall have
obtained an opinion of a nationally recognized independent tax counsel
experienced in such matters (a "Dissolution Tax Opinion") to the effect that on
or after October 23, 1997 as a result of (a) any amendment to, or change in, the
laws (or any regulations thereunder) of the United States or any political
subdivision or taxing authority thereof or therein, (b) any amendment to, or
change in, an interpretation or application of any such laws or regulations by
any legislative body, court, governmental agency or regulatory authority
(including the enactment of any legislation and the publication of any judicial
decision or regulatory determination), (c) any interpretation or pronouncement
that provides for a position with respect to such laws or regulations that
differs from the theretofore generally accepted position or (d) any action
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<PAGE>
taken by any governmental agency or regulatory authority, which amendment or
change is enacted, promulgated, issued or effective or which interpretation or
pronouncement is issued or announced or which action is taken, in each case on
or after October 23, 1997, there is more than an insubstantial risk that (i) the
Trust is, or will be within 90 days of the date thereof, subject to United
States federal income tax with respect to income accrued or received on the
Junior Subordinated Debentures, (ii) the Trust is, or will be within 90 days of
the date thereof, subject to more than a de minimis amount of other taxes,
duties or other governmental charges or (iii) interest payable by the Company to
the Trust on the Junior Subordinated Debentures is not, or within 90 days of the
date thereof will not be, deductible by the Company for United States federal
income tax purposes.
"Investment Company Event" means that the Regular Trustees shall have
received an opinion of nationally recognized independent counsel experienced in
practice under the Investment Company Act of 1940, as amended (the "1940 Act"),
that as a result of the occurrence of a change in law or regulation or a change
in interpretation or application of law or regulation by any legislative body,
court, governmental agency or regulatory authority (a "Change in 1940 Act Law"),
there is more than an insubstantial risk that the Trust is or will be considered
an "investment company" which is required to be registered under the 1940 Act,
which Change in 1940 Act Law becomes effective on or after October 23, 1997
"Special Event" means a Tax Event or an Investment Company Event.
LIMITED VOTING RIGHTS
Holders of TECONS will have limited voting rights, but will not be able to
appoint, remove or replace, or to increase or decrease the number of, Trustees,
which rights are vested exclusively in the Common Securities.
TRADING PRICES OF TECONS
The TECONS may trade at a price that does not fully reflect the value of
accrued but unpaid interest with respect to the underlying Junior Subordinated
Debentures. A holder who disposes of his TECONS between record dates for
payments of distributions thereon will be required to include accrued but unpaid
interest on the Junior Subordinated Debentures through the date of disposition
in income as ordinary income, and to add such amount to his adjusted tax basis
in his pro rata share of the underlying Junior Subordinated Debentures deemed
disposed of. Accordingly, such a holder will recognize a capital loss to the
extent the selling price (which may not fully reflect the value of accrued but
unpaid interest) is less than the holders adjusted tax basis (which will include
accrued but unpaid interest). Subject to certain limited exceptions, capital
losses cannot be applied to offset ordinary income for United States federal
income tax purposes.
POTENTIAL MARKET VOLATILITY DURING EXTENSION PERIOD
As described above, the Company has the right to extend an interest payment
period on the Junior Subordinated Debentures from time to time for a period not
exceeding 20 consecutive quarterly interest periods. If the Company determines
to extend an interest payment period, or if the Company thereafter extends an
Extension Period or prepays interest accrued during an Extension Period as
described above, the market price of the TECONS is likely to be affected. In
addition, as a result of such rights, the market price of the TECONS (which
represent an undivided interest in Junior Subordinated Debentures) may be more
volatile than other securities on which original issue discount accrues that do
not have such rights. A holder that disposes of its TECONS during an Extension
Period, therefore, may not receive the same return on its investment as a holder
that continues to hold its TECONS.
POSSIBLE PRICE VOLATILITY OF THE TECONS AND LACK OF PUBLIC MARKET
There can be no assurance that an active trading market for the TECONS will
develop or be sustained. If such a market were to develop, the TECONS could
trade at prices that may be higher or lower than their offering price depending
upon many factors, including prevailing interest rates, the Company's operating
results and the markets for similar securities. Historically, the market for
non-
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<PAGE>
investment grade debt has demonstrated substantial volatility in the prices of
securities similar to the TECONS. There can be no assurance that the future
market for the TECONS will not be subject to similar volatility. According, no
assurance can given as to the liquidity of the TECONS.
The Initial Purchasers, other than Unterburg Harris, have informed the
Company that they currently intend to make a market in the TECONS. However,
they are not obligated to do so, and any such market making may be discontinued
at any time without notice. See "Plan of Distribution."
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, NINE MONTHS
------------------------------------------------- ENDED
1992 1993 1994 1995 1996 SEPTEMBER 30, 1997
--------- --------- --------- --------- --------- -------------------
<S> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges ......... 1.37 1.62 2.08 2.18 1.83 1.45
</TABLE>
For the purpose of computing the ratio of earnings to fixed charges,
earnings consist of income from continuing operations before income taxes and
minority interest, plus fixed charges, less capitalized interest, less excess of
earnings over dividends of less-than-fifty-percent-owned companies. Fixed
charges consist of interest (including capitalized interest) on all
indebtedness, amortization of debt discount and expense and that portion of
rental expense which the Company believes to be representative of an interest
factor. A statement setting forth the computation of the above ratios is on file
as an exhibit to the Registration Statement of which this Prospectus is a part.
During the period from January 1, 1992 until September 30, 1997, no shares
of Preferred Stock were issued or outstanding, and during that period the
Company did not pay any Preferred Stock dividends.
25
<PAGE>
USE OF PROCEEDS
There will be no proceeds to the Company or the Trust from the sale of
TECONS pursuant to the Prospectus.
PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY
AES Common Stock began trading on the NYSE on October 16, 1996 under the
symbol "AES." Prior to that date, AES Common Stock had been quoted on the NASDAQ
National Market System ("NASDAQ/NMS") under the symbol "AESC." The following
table sets forth for the periods indicated the high and low sale prices for the
Common Stock as reported on the NYSE Composite Tape and by NASDAQ/NMS. In July
1997, AES announced a two-for-one stock split, in the form of a stock dividend,
for holders of record on July 28, 1997 of its Common Stock, paid on August 28,
1997. The prices set forth below reflect adjustment for such stock split.
<TABLE>
<CAPTION>
HIGH LOW
---------- ----------
<S> <C> <C>
1995
- ----
First Quarter ............................... $ 9.88 $ 8.00
Second Quarter .............................. 9.63 8.00
Third Quarter ............................... 10.81 9.25
Fourth Quarter .............................. 12.00 9.38
1996
- ----
First Quarter ............................... $ 12.63 $ 10.50
Second Quarter .............................. 14.81 11.13
Third Quarter ............................... 20.25 13.94
Fourth Quarter .............................. 25.06 19.63
1997
- ----
First Quarter ............................... $ 34.13 $ 22.63
Second Quarter .............................. 37.75 27.50
Third Quarter ............................... 45.25 34.63
Fourth Quarter .............................. 49.63 35.00
1998
- ----
First Quarter (through February 10) ......... $ 45.31 $ 41.25
</TABLE>
26
<PAGE>
No cash dividends have been paid on AES Common Stock since December 22,
1993 in order to provide capital for the Company's equity investments in
projects.
The Company's ability to declare and pay dividends (and to make payments
with respect to the Junior Subordinated Debentures) is dependent, among other
things, on the ability of its project subsidiaries to declare and pay dividends
(and otherwise distribute cash) to it, the Company's ability to service its
parent company debt and the Company's ability to meet certain criteria for
paying dividends under the Revolver and under certain outstanding indebtedness.
The ability of the Company's subsidiaries to declare and pay dividends and
otherwise distribute cash to the Company is subject to certain limitations in
the project loans and other documents entered into by such project subsidiaries.
Such limitations permit the payment of dividends out of current cash flow for
quarterly, semi-annual or annual periods only at the end of such periods and
only after payment of principal and interest on project loans due at the end of
such periods.
Cash dividend payments on AES Common Stock are limited under the Revolver
to a certain percentage of cash flow. The indentures relating to the Company's
existing senior subordinated notes preclude the payment of cash dividends if at
the time of such payment or after giving effect thereto an event of default (as
defined), or an event that, after the giving of notice or lapse of time or both,
would become an event of default, shall have occurred and be continuing, if
certain fixed charge coverage ratios are not met or if the payment of such
dividends, together with other restricted payments, would exceed certain limits.
27
<PAGE>
AES TRUST II
AES Trust II is a statutory business trust under the Delaware Business
Trust Act (the "Business Trust Act") formed pursuant to an amended and restated
declaration of trust dated as of October 29, 1997 (the "Declaration") among the
Trustees and the Company and a certificate of trust filed with the Secretary of
State of the State of Delaware, copies of which have been filed as an exhibit to
the Registration Statement of which this Prospectus is a part. The Declaration
is qualified under the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act").
TRUST SECURITIES
Upon issuance of the TECONS, the holders thereof will own all of the issued
and outstanding TECONS. The Company will acquire Common Securities in an amount
equal to at least 3% of the total capital of the Trust and will own, directly or
indirectly, all of the issued and outstanding Common Securities. The Trust
exists for the purpose of (a) issuing its Trust Securities for cash and
investing the proceeds thereof in an equivalent amount of Junior Subordinated
Debentures and (b) engaging in such other activities as are necessary,
convenient and incidental thereto. The rights of the holders of the Trust
Securities, including economic rights, rights to information and voting rights,
are as set forth in the Declaration, the Business Trust Act and the Trust
Indenture Act. The Declaration does not permit the incurrence by the Trust of
any indebtedness for borrowed money or the making of any investment other than
in the Junior Subordinated Debentures. In the Declaration, the Company has
agreed to pay for all debts and obligations (other than with respect to the
Trust Securities) and all costs and expenses of the Trust, including the fees
and expenses of the Trustees and any income taxes, duties and other governmental
charges, and all costs and expenses with respect thereto, to which the Trust may
become subject, except for United States withholding taxes.
POWERS AND DUTIES AND TRUSTEES
The number of trustees (the "Trustees") of AES Trust shall initially be
five. Three of such Trustees (the "Regular Trustees") are individuals who are
employees or officers of the Company. The fourth such trustee will be The First
National Bank of Chicago, which is unaffiliated with the Company and which will
serve as the property trustee (the "Property Trustee") and act as the indenture
trustee for purposes of the Trust Indenture Act. The fifth such trustee is First
Chicago Delaware Inc. that has its principal place of business in the State of
Delaware (the "Delaware Trustee"). Pursuant to the Declaration, legal title to
the Junior Subordinated Debentures purchased by the Trust will be held by the
Property Trustee for the benefit of the holders of the Trust Securities, and the
Property Trustee will have the power to exercise all rights, powers and
privileges under the Indenture with respect to the Junior Subordinated
Debentures. In addition, the Property Trustee will maintain exclusive control of
a segregated non-interest bearing bank account (the "Property Account") to hold
all payments in respect of the Junior Subordinated Debentures purchased by the
Trust for the benefit of the holders of Trust Securities. The Property Trustee
will promptly make distributions to the holders of the Trust Securities out of
funds from the Property Account. The Guarantee is separately qualified under the
Trust Indenture Act and will be held by The First National Bank of Chicago,
acting in its capacity as indenture trustee with respect thereto, for the
benefit of the holders of the TECONS. As used in this Prospectus the term
"Property Trustee" with respect to the Trust refers to The First National Bank
of Chicago acting either in its capacity as a Trustee under the Declaration and
the holder of legal title to the Junior Subordinated Debentures purchased by the
Trust or in its capacity as indenture trustee under, and the holder of, the
Guarantee, as the context may require. The Company, as the direct or indirect
owner of all of the Common Securities of the Trust, will have the exclusive
right (subject to the terms of the Declaration) to appoint, remove or replace
Trustees and to increase or decrease the number of Trustees, provided that the
number of Trustees shall be, except under certain circumstances, at least five
and the majority of Trustees shall be Regular Trustees. The term of the Trust
set forth in this Prospectus may terminate earlier as provided in the
Declaration.
The duties and obligations of the Trustees of the Trust shall be governed
by the Declaration of the Trust, the Business Trust Act and the Trust Indenture
Act. Under its Declaration, the Trust shall not, and the Trustees shall cause
the Trust not to, engage in any activity other than in connection with the
purposes of
28
<PAGE>
the Trust or other than as required or authorized by the related Declaration. In
particular, the Trust shall not and the Trustees shall cause the Trust not to
(a) invest any proceeds received by the Trust from holding the Junior
Subordinated Debentures purchased by the Trust but shall promptly distribute
from the Property Account all such proceeds to holders of Trust Securities
pursuant to the terms of the related Declaration and of the Trust Securities;
(b) acquire any assets other than as expressly provided in the related
Declaration; (c) possess Trust property for other than a Trust purpose; (d) make
any loans, other than loans represented by the Junior Subordinated Debentures;
(e) possess any power or otherwise act in such a way as to vary the assets of
the Trust or the terms of its Trust Securities in any way whatsoever; (f) issue
any securities or other evidences of beneficial ownership of, or beneficial
interests in, the Trust other than its Trust Securities; (g) incur any
indebtedness for borrowed money or (h)(i) direct the time, method and place of
exercising any trust or power conferred upon the Indenture Trustee (as defined
under "Description of the Junior Subordinated Debentures") with respect to the
Junior Subordinated Debentures deposited in the Trust as trust assets or upon
the Property Trustee with respect to the TECONS, (ii) waive any past default
that is waivable under the Indenture or the Declaration, (iii) exercise any
right to rescind or annul any declaration that the principal of all of the
Junior Subordinated Debentures deposited in the Trust as trust assets shall be
due and payable or (iv) consent to any amendment, modification or termination of
the Indenture or such Junior Subordinated Debentures, in each case where such
consent shall be required, unless in the case of this clause (h) the Property
Trustee shall have received an unqualified opinion of nationally recognized
independent tax counsel recognized as expert in such matters to the effect that
such action will not cause the Trust to be classified for United States federal
income tax purposes as an association taxable as a corporation or a partnership
and that the Trust will continue to be classified as a grantor trust for United
States federal income tax purposes.
BOOKS AND RECORDS
The books and records of AES Trust will be maintained at the principal
office of the Trust and will be open for inspection by a holder of TECONS or his
representative for any purpose reasonably related to his interest in AES Trust
during normal business hours.
THE PROPERTY TRUSTEE
The Property Trustee, for the benefit of the holders of the Trust
Securities of the Trust, is authorized under the Declaration to exercise all
rights under the Indenture with respect to the Junior Subordinated Debentures
deposited in AES Trust as trust assets, including its rights as the holder of
such Junior Subordinated Debentures to enforce the Company's obligations under
such Junior Subordinated Debentures upon the occurrence of an Indenture Event of
Default.
The Property Trustee shall also be authorized to enforce the rights of
holders of TECONS under the Guarantee. If the Trust's failure to make
distributions on the TECONS is a consequence of the Company's exercise of any
right under the terms of the Junior Subordinated Debentures deposited in the
Trust as trust assets to extend the interest payment period for such Junior
Subordinated Debentures, the Property Trustee will have no right to enforce the
payment of distributions on such TECONS until an event of default under the
Declaration with respect to the Trust Securities (an "Event of Default" or
"Declaration Event of Default") shall have occurred. Holders of at least a
majority in liquidation amount of the TECONS held by the Trust will have the
right to direct the Property Trustee with respect to certain matters under the
Declaration and the Guarantee. If the Property Trustee fails to enforce its
rights under the Indenture or fails to enforce the Guarantee, to the extent
permitted by applicable law, any holder of TECONS may, after a period of 30 days
has elapsed from such holder's written request to the Property Trustee to
enforce such rights, institute a legal proceeding against the Company to enforce
such rights or the Guarantee, as the case may be. In addition, the holders of at
least 25% in aggregate liquidation preference of the outstanding TECONS would
have the right to directly institute proceedings for enforcement of payments to
such holders of principal of, or premium, if any, or interest on the Junior
Subordinated Debentures having a principal amount equal to the aggregate
liquidation preference of the TECONS of such holders (a "Direct Action"). In
connection with such Direct Action, the Company will be subrogated to the rights
of such holder of TECONS under the Declaration to the extent of any payment made
by the Company to such holders of TECONS in such Direct Action.
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<PAGE>
Notwithstanding the foregoing, if an Event of Default has occurred and is
continuing and such event is attributable to the failure of the Company to pay
interest or principal on the applicable series of Junior Subordinated Debentures
on the date such interest or principal is otherwise payable (or in the case of
redemption, on the redemption date), then a holder of TECONS may directly
institute a proceeding for enforcement of payment to such holder of the
principal of or interest on the applicable series of Junior Subordinated
Debentures having a principal amount equal to the aggregate liquidation amount
of the TECONS of such holder (a "Holder Direct Action") on or after the
respective due date specified in the applicable series of Junior Subordinated
Debentures. In connection with such Holder Direct Action, the Company will be
subrogated to the rights of such holder of TECONS under the Declaration to the
extent of any payment made by the Company to such holder of TECONS in such
Holder Direct Action.
DESCRIPTION OF THE TECONS
The TECONS were issued pursuant to the terms of the Declaration which is
qualified under the Trust Indenture Act. The Property Trustee, The First
National Bank of Chicago, but not the other Trustees of the Trust, will act as
the indenture trustee for purposes of the Trust Indenture Act. The terms of the
TECONS and the Declaration include those stated in the Declaration and those
made part of the Declaration by the Trust Indenture Act and the Business Trust
Act. The following summarizes the material terms and provisions of the TECONS
and is qualified in its entirety by reference to, the Declaration, the Business
Trust Act and the Trust Indenture Act.
GENERAL
The Declaration authorizes the Trust to issue the TECONS, which represent
preferred undivided beneficial interests in the assets of the Trust, and the
Common Securities, which represent common undivided beneficial interests in the
assets of the Trust. All of the Common Securities will be owned, directly or
indirectly, by the Company. The Common Securities and the TECONS rank pari passu
with each other and will have equivalent terms except that (i) if a Declaration
Event of Default occurs and is continuing, the rights of the holders of the
Common Securities to payment in respect of periodic Distributions and payments
upon liquidation, redemption or otherwise are subordinated to the rights of the
holders of the TECONS and (ii) holders of Common Securities have the exclusive
right (subject to the terms of the Declaration) to appoint, remove or replace
Trustees and to increase or decrease the number of Trustees. The Declaration
does not permit the issuance by the Trust of any securities or other evidences
of beneficial ownership of, or beneficial interests in, the Trust other than the
TECONS and the Common Securities, the incurrence of any indebtedness for
borrowed money by the Trust or the making of any investment other than in the
Junior Subordinated Debentures. Pursuant to the Declaration, the Property
Trustee will own and hold the Junior Subordinated Debentures as trust assets for
the benefit of the holders of the TECONS and the Common Securities. The payment
of Distributions out of moneys held by the Property Trustee and payments on
redemption of the TECONS or liquidation of the Trust are guaranteed by the
Company on a subordinated basis as and to the extent described under
"Description of the Guarantee." The Property Trustee will hold the Guarantee for
the benefit of holders of the TECONS. The Guarantee is a full and unconditional
guarantee from the time of issuance of the TECONS, but the Guarantee covers
Distributions and other payments on the TECONS only if and to the extent that
the Company has made a payment to the Property Trustee of interest or principal
on the Junior Subordinated Debentures deposited in the Trust as trust assets.
See "-- Voting Rights."
DISTRIBUTIONS
Distributions on the TECONS will be fixed at an annual rate of $2.75 per
TECONS. Distributions in arrears for more than one calendar quarter will bear
interest thereon at the rate per annum of 5.50% (to the extent permitted by
law), compounded quarterly. The term "Distributions" as used herein includes any
such interest payable unless otherwise stated. The amount of distributions
payable for any period will be computed on the basis of a 360-day year of twelve
30 day months.
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<PAGE>
Distributions on the TECONS will be cumulative, will accrue from October
29, 1997 and, except as otherwise described below, will be payable quarterly in
arrears on the last day of each quarter, commencing on December 31, 1997, but
only if, and to the extent that, interest payments are made in respect of Junior
Subordinated Debentures held by the Property Trustee.
So long as the Company shall not be in default in the payment of interest
on the Junior Subordinated Debentures, the Company has the right under the Trust
Indenture to defer payments of interest on the Junior Subordinated Debentures by
extending the interest payment period from time to time on the Junior
Subordinated Debentures for a period not exceeding 20 consecutive quarterly
interest periods and, as a consequence, the Trust would defer quarterly
Distributions on the TECONS (though such Distributions would continue to accrue
with interest thereon at the rate of 5.50% per annum, compounded quarterly)
during any such Extension Period; provided that no such period may extend beyond
the stated maturity of the Junior Subordinated Debentures. If the Company
exercises the right to extend an interest payment period, the Company may not
declare or pay dividends on, or redeem, purchase, acquire or make a distribution
or liquidation payment with respect to, any of its common stock or preferred
stock during such Extension Period; provided that the foregoing will not apply
to any stock dividend by the Company payable in AES Common Stock. Prior to the
termination of any such Extension Period, the Company may further extend such
Extension Period; provided that such Extension Period together with all such
previous and further extensions thereof may not exceed 20 consecutive quarterly
interest periods. Upon the termination of any Extension Period and the payment
of all amounts then due, the Company may commence a new Extension Period,
subject to the above requirements. The Company may also prepay at any time all
or any portion of the interest accrued during an Extension Period. Consequently,
there could be multiple Extension Periods of varying lengths throughout the term
of the Junior Subordinated Debentures, not to exceed 20 consecutive quarters or
to cause any extension beyond the maturity of the Junior Subordinated
Debentures. See "Description of the Junior Subordinated Debentures -- Interest"
and "-- Option to Extend Interest Payment Period" and "Risk Factors -- Option to
Extend Interest Payment Period; Tax Impact of Extension." Payments of accrued
distributions will be payable to holders of TECONS as they appear on the books
and records of the Trust on the first record date after the end of an Extension
Period.
Distributions on the TECONS must be paid on the dates payable to the extent
that the Property Trustee has cash on hand in the Property Account to permit
such payment. The funds available for distribution to the holders of the TECONS
will be limited to payments received by the Property Trustee in respect of the
Junior Subordinated Debentures that are deposited in the Trust as trust assets.
See "Description of the Junior Subordinated Debentures." If the Company does not
make interest payments on the Junior Subordinated Debentures, the Property
Trustee will not make distributions on the TECONS. Under the Declaration, if and
to the extent the Company does make interest payments on the Junior Subordinated
Debentures deposited in the Trust as trust assets, the Property Trustee is
obligated to make distributions on the Trust Securities on a Pro Rata Basis. As
used in this Prospectus the term "Pro Rata Basis" shall mean pro rata to each
holder of TECONS according to the aggregate liquidation amount of the Trust
Securities of AES Trust held by the relevant holder in relation to the aggregate
liquidation amount of all Trust Securities of AES Trust outstanding unless, in
relation to a payment, a Declaration Event of Default has occurred and is
continuing, in which case any funds available to make such payment shall be paid
first to each holder of the TECONS pro rata according to the aggregate
liquidation amount of the TECONS held by the relevant holder in relation to the
aggregate liquidation amount of all the TECONS outstanding, and only after
satisfaction of all amounts owed to the holders of TECONS, to each holder of
Common Securities of AES Trust pro rata according to the aggregate liquidation
amount of all Common Securities outstanding.
The payment of distributions on the TECONS is guaranteed by the Company on
a subordinated basis as and to the extent set forth under "Description of the
Guarantee." The Guarantee is a full and unconditional guarantee from the time of
issuance of the TECONS but the Guarantee covers distributions and other payments
on the TECONS only if and to the extent that the Company has made a payment to
the Property Trustee of interest or principal on the Junior Subordinated
Debentures deposited in the Trust as trust assets. Distributions on the TECONS
will be made to the holders thereof as they appear on the books and records of
the Trust on the relevant record dates, which, as long as the TECONS remain in
book-entry form, will be
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<PAGE>
one Business Day (as defined herein) prior to the relevant Distribution payment
date. Distributions payable on any TECONS that are not punctually paid on any
Distribution payment date as a result of the Company having failed to make the
corresponding interest payment on the Junior Subordinated Debentures will
forthwith cease to be payable to the person in whose name such TECONS is
registered on the relevant record date, and such defaulted Distribution will
instead be payable to the person in whose name such TECONS is registered on the
special record date established by the Regular Trustees, which record date shall
correspond to the special record date or other specified date determined in
accordance with the Indenture; provided, however, that Distributions shall not
be considered payable on any Distribution payment date falling within an
Extension Period unless the Company has elected to make a full or partial
payment of interest accrued on the Junior Subordinated Debentures on such
Distribution payment date. Distributions on the TECONS will be paid through the
Property Trustee who will hold amounts received in respect of the Junior
Subordinated Debentures in the Property Account for the benefit of the holders
of the Preferred and Common Securities. Subject to any applicable laws and
regulations and the provisions of the Declaration, each such payment will be
made as described under "-- Book-Entry; Delivery and Form" and "-- The Global
TECONS" below. In the event that the TECONS do not continue to remain in
book-entry form, the Regular Trustees shall have the right to select relevant
record dates which shall be more than one Business Day prior to the relevant
payment dates. The Declaration provides that the payment dates or record dates
for the TECONS shall be the same as the payment dates and record dates for the
Junior Subordinated Debentures. All distributions paid with respect to the Trust
Securities shall be paid on a Pro Rata Basis to the holders thereof entitled
thereto. If any date on which distributions are to be made on the TECONS is not
a Business Day, then payment of the distribution to be made on such date will be
made on the next succeeding day that is a Business Day (and without any interest
or other payment in respect of any such delay) except that, if such Business Day
is in the next succeeding calendar year, such payment shall be made on the
immediately preceding Business Day, in each case with the same force and effect
as if made on such date. "Business Day" shall mean any day other than Saturday,
Sunday or any other day on which banking institutions in the City of New York in
the State of New York are permitted or required by any applicable law to close.
CONVERSION RIGHTS
General
The TECONS will be convertible at any time prior to the close of business
on September 30, 2012 (or in the case of the TECONS called for redemption, prior
to the close of the business on the Business Day prior to the Redemption Date)
(the "Conversion Expiration Date"), at the option of the holders thereof and in
the manner described below, into shares of AES Common Stock at an initial
conversion rate of 0.8914 share of AES Common Stock for each TECONS (equivalent
to a conversion price of $56.09 per share of AES Common Stock (the "Initial
Conversion Price"), subject to adjustment as described under "-- Conversion
Price Adjustments -- General" and "-- Conversion Price Adjustments --
Fundamental Change" below. If a TECONS is surrendered for conversion after the
close of business on any regular record date for payment of a Distribution and
before the opening of business on the corresponding Distribution payment date,
then, notwithstanding such conversion, the Distribution payable on such
Distribution payment date will be paid in cash to the person in whose name the
TECONS is registered at the close of business on such record date, and (other
than a TECONS or a portion of a TECONS called for redemption on a redemption
date occurring after such record date and on or prior to such Distribution
payment date) when so surrendered for conversion, the TECONS must be accompanied
by payment of an amount equal to the Distribution payable on such Distribution
payment date.
The terms of the TECONS provide that a holder of a TECONS wishing to
exercise its conversion right shall surrender such TECONS, together with an
irrevocable conversion notice, to the Property Trustee, as conversion agent (the
"Conversion Agent"), which shall, on behalf of such holder, exchange such TECONS
for an equivalent amount of Junior Subordinated Debentures and immediately
convert such Junior Subordinated Debentures into AES Common Stock. Holders may
obtain copies of the required form of the conversion notice from the Conversion
Agent. So long as a book-entry system for the TECONS is in effect, however,
procedures for converting the TECONS into shares of AES Common Stock will
differ, as described under "Book-Entry -- Delivery and Form" and "-- The Global
TECONS."
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No fractional shares of AES Common Stock will be issued as a result of
conversion, but in lieu thereof such fractional interest will be paid by AES in
cash based on the market price of AES Common Stock on the date such TECONS are
surrendered for conversion.
Conversion Price Adjustments -- General
The Initial Conversion Price is subject to adjustment (under formulae set
forth in the Trust Indenture) in certain events, including:
(i) the issuance of AES Common Stock as a dividend or distribution on
AES Common Stock;
(ii) certain subdivisions and combinations of AES Common Stock;
(iii) the issuance to all holders of AES Common Stock of certain rights
or warrants to purchase AES Common Stock at less than the then current
market price;
(iv) the distribution to all holders of AES Common Stock of (A) equity
securities of the Company (other than AES Common Stock), (B) evidences
of indebtedness of the Company and/or (C) other assets (including
securities, but excluding (1) any rights or warrants referred to in
clause (iii) above, (2) any rights or warrants to acquire any capital
stock of any entity other than the Company, (3) any dividends or
distributions in connection with the liquidation, dissolution or
winding-up of the Company, (4) any dividends payable solely in cash that
may from time to time be fixed by the Board of Directors of the Company
and (5) any dividends or distributions referred to in clause (i) above);
(v) distributions to all holders of AES Common Stock, consisting of
cash, excluding (a) any cash dividends on AES Common Stock to the extent
that the aggregate cash dividends per share of AES Common Stock in any
consecutive 12-month period do not exceed the greater of (x) the amount
per share of AES Common Stock of the cash dividends paid on AES Common
Stock in the immediately preceding 12-month period, to the extent that
such dividends for the immediately preceding 12-month period did not
require an adjustment of the conversion price pursuant to this clause (v)
(as adjusted to reflect subdivisions or combinations of AES Common
Stock), and (y) 15% of the average of the daily Closing Price (as defined
in the Trust Indenture) of AES Common Stock for the ten consecutive
Trading Days (as defined in the Trust Indenture) immediately prior to the
date of declaration of such dividend, and (b) any dividend or
distribution in connection with the liquidation, dissolution or winding
up of the Company or a redemption of any rights issued under a rights
agreement; provided, however, that no adjustment shall be made pursuant
to this clause (v) if such distribution would otherwise constitute a
Fundamental Change (as defined below) and be reflected in a resulting
adjustment described below; and
(vi) payment in respect of a tender or exchange offer by the Company or
any subsidiary of the Company for AES Common Stock to the extent that
the cash and value of any other consideration included in such payment
per share of AES Common Stock exceed (by more than 10%, with any smaller
excess being disregarded in computing the adjustment provided hereby)
the first reported sale price per share of AES Common Stock on the
Trading Day next succeeding the Expiration Time (as defined in the Trust
Indenture) for such tender or exchange offer.
If any adjustment is required to be made as set forth in clause (v) above
as a result of a distribution which is a dividend described in subclause (a) of
clause (v) above, such adjustment would be based upon the amount by which such
distribution exceeds the amount of the dividend permitted to be excluded
pursuant to such subclause (a) of clause (v). If an adjustment is required to be
made as set forth in clause (v) above as a result of a distribution which is not
such a dividend, such adjustment would be based upon the full amount of such
distribution. If an adjustment is required to be made as set forth in clause
(vi) above, such adjustment would be calculated based upon the amount by which
the aggregate consideration paid for the AES Common Stock acquired in the tender
or exchange offer exceeds 110% of the value of such shares based on the
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first reported sale price of AES Common Stock on the Trading Day next succeeding
the Expiration Time. In lieu of making such a conversion price adjustment in the
case of certain dividends or distributions, the Company may provide that upon
the conversion of the TECONS the holder converting such TECONS will receive, in
addition to the AES Common Stock to which such holder is entitled, the cash,
securities or other property which such holder would have received if such
holder had, immediately prior to the record date for such dividend or
distribution, converted its TECONS into AES Common Stock.
No adjustment in the conversion price will be required unless the
adjustment would require a change of at least 1% in the conversion price then in
effect; provided, however, that any adjustment that would otherwise be required
to be made shall be carried forward and taken into account in any subsequent
adjustment.
The Company from time to time may, to the extent permitted by law, reduce
the conversion price by any amount for any period of at least 20 Business Days
(as defined in the Trust Indenture), in which case the Company shall give at
least 15 days' notice of such reduction. In particular, the Company may, at its
option, make such reduction in the conversion price, in addition to those set
forth above, as the Company deems advisable to avoid or diminish any income tax
to holders of AES Common Stock resulting from any dividend or distribution of
stock (or rights to acquire stock) or from any event treated as such for tax
purposes or for any other reasons. See "Certain Federal Tax Consequences --
Adjustment of Conversion Price."
Conversion Price Adjustments -- Fundamental Change
In the event that the Company shall be a party to any transaction or series
of transactions constituting a Fundamental Change, including, without
limitation, (i) any recapitalization or reclassification of AES Common Stock
(other than a change in par value or as a result of a subdivision or combination
of AES Common Stock); (ii) any consolidation or merger of the Company with or
into another corporation as a result of which holders of AES Common Stock shall
be entitled to receive securities or other property or assets (including cash)
with respect to or in exchange for AES Common Stock (other than a merger which
does not result in a reclassification, conversion, exchange or cancellation of
the outstanding AES Common Stock); (iii) any sale or transfer of all or
substantially all of the assets of the Company; or (iv) any compulsory share
exchange, pursuant to any of which holders of AES Common Stock shall be entitled
to receive other securities, cash or other property, then appropriate provision
shall be made so that the holder of each TECONS then outstanding shall have the
right thereafter to convert such TECONS only into (x) if any such transaction
does not constitute a Common Stock Fundamental Change (as defined below), the
kind and amount of the securities, cash or other property that would have been
receivable upon such recapitalization, reclassification, consolidation, merger,
sale, transfer or share exchange by a holder of the number of shares of AES
Common Stock issuable upon conversion of such TECONS immediately prior to such
recapitalization, reclassification, consolidation, merger, sale, transfer or
share exchange, after, in the case of a Non-Stock Fundamental Change (as defined
below), giving effect to any adjustment in the conversion price in accordance
with clause (i) of the following paragraph, and (y) if any such transaction
constitutes a Common Stock Fundamental Change, shares of common stock of the
kind received by holders of AES Common Stock as result of such Common Stock
Fundamental Change in an amount determined in accordance with clause (ii) of the
following paragraph. The company formed by such consolidation or resulting from
such merger or which acquires such assets or which acquires the AES Common
Stock, as the case may be, shall enter into a supplemental indenture with the
Indenture Trustee (as defined herein), satisfactory in form to the Indenture
Trustee and executed and delivered to the Indenture Trustee, the provisions of
which shall establish such right. Such supplemental indenture shall provide for
adjustments which, for events subsequent to the effective date of such
supplemental indenture shall be as nearly equivalent as practical to the
relevant adjustments provided for in the preceding paragraphs and in this
paragraph.
Notwithstanding any other provision in the preceding paragraphs, if any
Fundamental Change occurs, the conversion price in effect will be adjusted
immediately after that Fundamental Change as follows:
(i) in the case of a Non-Stock Fundamental Change, the conversion price
per share of AES Common Stock immediately following such Non-Stock
Fundamental Change will be the lower of (A) the conversion price in effect
immediately prior to such Non-Stock Fundamental Change, but
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after giving effect to any other prior adjustments effected pursuant to the
preceding paragraphs, and (B) the result obtained by multiplying the
greater of the Applicable Price (as defined below) or the then applicable
Reference Market Price (as defined below) by a fraction of which the
numerator will be 100 and the denominator of which will be an amount based
on the date such Non-Stock Fundamental Change occurs. For the 12-month
period beginning October 29, 1997, the denominator will be 105.50, and the
denominator will decrease by 0.6875 during each successive 12-month period;
provided, that the denominator shall in no event be less than 100.0.
(ii) in the case of a Common Stock Fundamental Change, the conversion
price per share of AES Common Stock immediately following the Common Stock
Fundamental Change will be the conversion price in effect immediately prior
to the Common Stock Fundamental Change, but after giving effect to any
other prior adjustments effected pursuant to the preceding paragraphs,
multiplied by a fraction, the numerator of which is the Purchaser Stock
Price (as defined below) and the denominator of which is the Applicable
Price; provided, however, that in the event of a Common Stock Fundamental
Change in which (A) 100% of the value of the consideration received by a
holder of AES Common Stock (subject to certain limited exceptions) is
shares of common stock of the successor, acquiror or other third party (and
cash, if any, paid with respect to any fractional interests in the shares
of common stock resulting from the Common Stock Fundamental Change) and (B)
all of the AES Common Stock (subject to certain limited exceptions) shall
have been exchanged for, converted into, or acquired for, shares of common
stock (and cash, if any, with respect to fractional interests) of the
successor, acquiror or other third party, the conversion price per share of
AES Common Stock immediately following the Common Stock Fundamental Change
shall be the conversion price in effect immediately prior to the Common
Stock Fundamental Change divided by the number of shares of common stock of
the successor, acquiror, or other third party received by a holder of one
share of AES Common Stock as a result of the Common Stock Fundamental
Change.
The foregoing conversion price adjustments are designed, in "Fundamental
Change" transactions where all or substantially all of the AES Common Stock is
converted into securities, cash, or property and not more than 50% of the value
received by the holders of AES Common Stock consists of stock listed or admitted
for listing subject to notice of issuance on a national securities exchange or
quoted on the Nasdaq National Market of the Nasdaq Stock Market, Inc. (a
"Non-Stock Fundamental Change," as defined herein), to increase the securities,
cash or property into which each TECONS is convertible.
In a Non-Stock Fundamental Change transaction where the initial value
received per share of AES Common Stock (measured as described in the definition
of Applicable Price below) is lower than the then applicable conversion price of
the TECONS but greater than or equal to the Reference Market Price (as defined
herein), the conversion price will be adjusted as described above with the
effect that each TECONS will be convertible into securities, cash or property of
the same type received by the holders of AES Common Stock in such transaction
but in an amount per TECONS equal to the amount indicated as the denominator as
of the date of such transaction as set forth in clause (i) above with respect to
conversion prices for Non-Stock Fundamental Changes.
In a Non-Stock Fundamental Change transaction where the initial value
received per share of AES Common Stock (measured as described in the definition
of Applicable Price below) is lower than both the conversion price of a TECONS
and the Reference Market Price, the conversion price will be adjusted as
described above but calculated as though such initial value had been the
Reference Market Price.
In a Fundamental Change transaction where all or substantially all the AES
Common Stock is converted into securities, cash, or property and more than 50%
of the value received by the holders of AES Common Stock (subject to certain
limited exceptions) consists of listed or Nasdaq National Market traded common
stock (a "Common Stock Fundamental Change," as defined herein), the foregoing
adjustments are designed to provide in effect that (a) where AES Common Stock is
converted partly into such common stock and partly into other securities, cash,
or property, each TECONS will be convertible solely into a number of shares of
such common stock determined so that the initial value of such shares (measured
as described in the definition of Purchaser Stock Price below) equals the value
of the shares of AES Common
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Stock into which such TECONS was convertible immediately before the transaction
(measured as aforesaid) and (b) where AES Common Stock is converted solely into
such common stock, each TECONS will be convertible into the same number of
shares of such common stock receivable by a holder of the number of shares of
AES Common Stock into which such TECONS was convertible immediately before such
transaction. In determining the amount and type of consideration received by a
holder of AES Common Stock in the event of a Fundamental Change, consideration
received by a holder of AES Common Stock pursuant to a statutory right of
appraisal will be disregarded.
"Applicable Price" means (i) in the event of a Non-Stock Fundamental Change
in which the holders of AES Common Stock receive only cash, the amount of cash
receivable by a holder of one share of AES Common Stock and (ii) in the event of
any other Fundamental Change, the average of the Closing Prices (as defined in
the First Supplemental Indenture) for one share of AES Common Stock during the
ten Trading Days immediately prior to the record date for the determination of
the holders of AES Common Stock entitled to receive cash, securities, property
or other assets in connection with such Fundamental Change or, if there is no
such record date, prior to the date on which the holders of the AES Common Stock
will have the right to receive such cash, securities, property or other assets.
"Common Stock Fundamental Change" means any Fundamental Change in which
more than 50% of the value (as determined in good faith by the Company's Board
of Directors) of the consideration received by holders of AES Common Stock
(subject to certain limited exceptions) pursuant to such transaction consists of
shares of common stock that, for the ten consecutive Trading Days immediately
prior to such Fundamental Change has been admitted for listing or admitted for
listing subject to notice of issuance on a national securities exchange or
quoted on the Nasdaq National Market, provided, however, that a Fundamental
Change will not be a Common Stock Fundamental Change unless either (i) the
Company continues to exist after the occurrence of such Fundamental Change and
the outstanding TECONS continue to exist as outstanding TECONS or (ii) the
outstanding TECONS continue to exist as TECONS and are convertible into shares
of common stock of the successor to the Company.
"Fundamental Change" means the occurrence of any transaction or event or
series of transactions or events pursuant to which all or substantially all of
the AES Common Stock is exchanged for, converted into, acquired for or
constitutes solely the right to receive cash, securities, property or other
assets (whether by means of an exchange offer, liquidation, tender offer,
consolidation, merger, combination, reclassification, recapitalization or
otherwise); provided, however, in the case of a plan involving more than one
such transaction or event for purposes of adjustment of the conversion price,
such Fundamental Change will be deemed to have occurred when substantially all
of the AES Common Stock has been exchanged for, converted into, or acquired for
or constitutes solely the right to receive cash, securities, property or other
assets but the adjustment shall be based upon the consideration that the holders
of AES Common Stock received in the transaction or event as a result of which
more than 50% of the AES Common Stock shall have been exchanged for, converted
into, or acquired for, or shall constitute solely the right to receive such
cash, securities, properties or other assets.
"Non-Stock Fundamental Change" means any Fundamental Change other than a
Common Stock Fundamental Change.
"Purchaser Stock Price" means, with respect to any Common Stock Fundamental
Change, the average of the Closing Prices for one share of common stock received
by holders of AES Common Stock in such Common Stock Fundamental Change during
the ten Trading Days immediately prior to the record date for the determination
of the holders of AES Common Stock entitled to receive such shares of common
stock or, if there is no such record date, prior to the date upon which the
holders of AES Common Stock shall have the right to receive such shares of
common stock.
"Reference Market Price" will initially mean $29.92 (which represents
662/3% of the last reported sale price per share of AES's Common Stock on the
NYSE on October 23, 1997) and, in the event of any adjustment to the conversion
price other than as a result of a Fundamental Change, the Reference Market Price
will also be adjusted so that the ratio of the Reference Market Price to the
conversion price after giving effect to any adjustment will always be the same
as the ratio of the initial Reference Market Price to the Initial Conversion
Price of the TECONS.
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Conversions of the TECONS may be effected by delivering them to the office
or agency of the Company maintained for such purpose in the Borough of
Manhattan, the City of New York.
Conversion price adjustments may, in certain circumstances, result in
constructive distributions that could be taxable as dividends under the Internal
Revenue Code of 1986, as amended (the "Code"), to holders of TECONS or to
holders of AES Common Stock issued upon conversion thereof. See "Certain Federal
Tax Consequences -- Adjustment of Conversion Price."
No adjustment in the conversion price will be required unless the
adjustment would require a change of at least 1% in the conversion price then in
effect; provided, however, that any adjustment that would otherwise be required
to be made shall be carried forward and taken into account in any subsequent
adjustment.
SPECIAL EVENT REDEMPTION OR DISTRIBUTION
If, at any time, a Tax Event or an Investment Company Event (each as
hereinafter defined, and each a "Special Event") shall occur and be continuing,
the Trust shall, unless the Junior Subordinated Debentures are redeemed in the
limited circumstances described below, be dissolved with the result that, after
satisfaction of creditors of the Trust, Junior Subordinated Debentures with an
aggregate principal amount equal to the aggregate stated liquidation amount of
the TECONS and the Common Securities would be distributed on a Pro Rata Basis to
the holders of the TECONS and the Common Securities in liquidation of such
holders' interests in the Trust, within 90 days following the occurrence of such
Special Event; provided, however, that in the case of the occurrence of a Tax
Event, as a condition of such dissolution and distribution, the Regular Trustees
shall have received an opinion of nationally recognized independent tax counsel
experienced in such matters (a "No Recognition Opinion"), which opinion may rely
on any then applicable published revenue rulings of the Internal Revenue
Service, to the effect that the holders of the TECONS will not recognize any
gain or loss for United States Federal income tax purposes as a result of such
dissolution and distribution of Junior Subordinated Debentures; and, provided,
further, that, if at the time there is available to the Trust the opportunity to
eliminate, within such 90 day period, the Special Event by taking some
ministerial action, such as filing a form or making an election, or pursuing
some other similar reasonable measure, which has no adverse effect on the Trust
or the Company or the holders of the TECONS, the Trust will pursue such measure
in lieu of dissolution. Furthermore, if in the case of the occurrence of a Tax
Event, (i) the Regular Trustees have received an opinion (a "Redemption Tax
Opinion") of nationally recognized independent tax counsel experienced in such
matters that, as a result of a Tax Event, there is more than an insubstantial
risk that the Company would be precluded from deducting the interest on the
Junior Subordinated Debentures for United States federal income tax purposes
even if the Junior Subordinated Debentures were distributed to the holders of
TECONS and Common Securities in liquidation of such holders' interests in the
Trust as described above or (ii) the Regular Trustees shall have been informed
by such tax counsel that a No Recognition Opinion cannot be delivered to the
Trust, the Company shall have the right, upon not less than 30 nor more than 60
days notice, to redeem the Junior Subordinated Debentures in whole or in part
for cash within 90 days following the occurrence of such Tax Event, and promptly
following such redemption TECONS and Common Securities with an aggregate
liquidation amount equal to the aggregate principal amount of the Junior
Subordinated Debentures so redeemed will be redeemed by the Trust at the
Redemption Price on a Pro Rata Basis; provided, however, that if at the time
there is available to the Company or the Regular Trustees the opportunity to
eliminate, within such 90 day period, the Tax Event by taking some ministerial
action, such as filing a form or making an election, or pursuing some other
similar reasonable measure, which has no adverse effect on the Trust, the
Company or the holders of the TECONS, the Company will pursue such measure in
lieu of redemption and provided further that the Company shall have no right to
redeem the Junior Subordinated Debentures while the Regular Trustees on behalf
of the Trust are pursuing any such ministerial action. The Common Securities
will be redeemed on a Pro Rata Basis with the TECONS, except that if an Event of
Default under the Declaration has occurred and is continuing, the TECONS will
have a priority over the Common Securities with respect to payment of the
Redemption Price.
"Tax Event" means that the Regular Trustees shall have obtained an opinion
of a nationally recognized independent tax counsel experienced in such matters
(a "Dissolution Tax Opinion") to the effect
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that on or after October 23, 1997 as a result of (a) any amendment to, or change
in, the laws (or any regulations thereunder) of the United States or any
political subdivision or taxing authority thereof or therein, (b) any amendment
to, or change in, an interpretation or application of any such laws or
regulations by any legislative body, court, governmental agency or regulatory
authority (including the enactment of any legislation and the publication of any
judicial decision or regulatory determination), (c) any interpretation or
pronouncement that provides for a position with respect to such laws or
regulations that differs from the theretofore generally accepted position or (d)
any action taken by any governmental agency or regulatory authority, which
amendment or change is enacted, promulgated, issued or effective or which
interpretation or pronouncement is issued or announced or which action is taken,
in each case on or after October 23, 1997, there is more than an insubstantial
risk that (i) the Trust is, or will be within 90 days of the date thereof,
subject to United States Federal income tax with respect to income accrued or
received on the Junior Subordinated Debentures, (ii) the Trust is, or will be
within 90 days of the date thereof, subject to more than a de minimis amount of
other taxes, duties or other governmental charges or (iii) interest payable by
the Company to the Trust on the Junior Subordinated Debentures is not, or within
90 days of the date thereof will not be, deductible by the Company for United
States federal income tax purposes.
"Investment Company Event" means that the Regular Trustees shall have
received an opinion of nationally recognized independent counsel experienced in
practice under the Investment Company Act of 1940, as amended (the "1940 Act"),
that as a result of the occurrence of a change in law or regulation or a change
in interpretation or application of law or regulation by any legislative body,
court, governmental agency or regulatory authority (a "Change in 1940 Act Law"),
there is more than an insubstantial risk that the Trust is or will be considered
an "investment company" which is required to be registered under the 1940 Act,
which Change in 1940 Act Law becomes effective on or after October 23, 1997.
On the date fixed for any distribution of Junior Subordinated Debentures,
upon dissolution of the Trust, (i) the TECONS and the Common Securities will no
longer be deemed to be outstanding, (ii) the depositary or its nominee, as the
record holder of the TECONS, will receive a registered global certificate or
certificates representing the Junior Subordinated Debentures to be delivered
upon such distribution, and (iii) any certificates representing TECONS not held
by the depositary or its nominee will be deemed to represent Junior Subordinated
Debentures having an aggregate principal amount equal to the aggregate stated
liquidation amount of, with an interest rate identical to the distribution rate
of, and accrued and unpaid interest equal to accrued and unpaid distributions
on, such TECONS, until such certificates are presented to the Company or its
agent for transfer or reissuance.
There can be no assurance as to the market price for the Junior
Subordinated Debentures which may be distributed in exchange for TECONS if a
dissolution and liquidation of the Trust were to occur. Accordingly, the Junior
Subordinated Debentures which the investor may subsequently receive on
dissolution and liquidation of the Trust, may trade at a discount to the price
of the TECONS exchanged.
MANDATORY REDEMPTION
Upon the repayment of the Junior Subordinated Debentures, whether at
maturity, upon redemption or otherwise, the proceeds from such repayment or
payment will be promptly applied to redeem TECONS and Common Securities having
an aggregate liquidation amount equal to the Junior Subordinated Debentures so
repaid, upon not less than 30 nor more than 60 days' notice, at the Redemption
Price. The Common Securities will be entitled to be redeemed on a Pro Rata Basis
with the TECONS, except that if an Event of Default under the Declaration has
occurred and is continuing, the TECONS will have a priority over the Common
Securities with respect to payment of the Redemption Price. Subject to the
foregoing, if fewer than all outstanding TECONS and Common Securities are to be
redeemed, the TECONS and Common Securities will be redeemed on a Pro Rata Basis.
In the event fewer than all outstanding TECONS are to be redeemed, TECONS
registered in the name of and held by DTC or its nominee will be redeemed as
described under "-- Redemption Procedures" below.
REDEMPTION PROCEDURES
The Trust may not redeem any outstanding TECONS unless all accrued and
unpaid distributions have been paid on all TECONS for all quarterly distribution
periods terminating on or prior to the date of notice of redemption.
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If the Trust gives a notice of redemption in respect of TECONS (which
notice will be irrevocable) then, by 12:00 noon, New York City time, on the
redemption date and provided that the Company has paid to the Property Trustee a
sufficient amount of cash in connection with the related redemption or maturity
of the Junior Subordinated Debentures, the Trust will irrevocably deposit with
the Depositary funds sufficient to pay the applicable Redemption Price and will
give the Depositary irrevocable instructions and authority to pay the Redemption
Price to the holders of the TECONS. See "-- The Global TECONS." If notice of
redemption shall have been given and funds deposited as required, then,
immediately prior to the close of business on the date of such deposit,
distributions will cease to accrue on the TECONS called for redemption, such
TECONS shall no longer be deemed to be outstanding and all rights of holders of
such TECONS so called for redemption will cease, except the right of the holders
of such TECONS to receive the Redemption Price, but without interest on such
Redemption Price. Neither the Trustees nor the Trust shall be required to
register or cause to be registered the transfer of any TECONS which have been so
called for redemption. If any date fixed for redemption of TECONS is not a
Business Day, then payment of the Redemption Price payable on such date will be
made on the next succeeding day that is a Business Day (and without any interest
or other payment in respect of any such delay) except that, if such Business Day
falls in the next calendar year, such payment will be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date fixed for redemption. If the Company fails to repay Junior
Subordinated Debentures on maturity or on the date fixed for this redemption or
if payment of the Redemption Price in respect of TECONS is improperly withheld
or refused and not paid by the Property Trustee or by the Company pursuant to
the Guarantee described under "Description of the Guarantee," distributions on
such TECONS will continue to accrue, from the original redemption date of the
TECONS to the date of payment, in which case the actual payment date will be
considered the date fixed for redemption for purposes of calculating the
Redemption Price.
In the event that fewer than all of the outstanding TECONS are to be
redeemed, the TECONS will be redeemed as described below under "-- Book-Entry;
Delivery and Form" and "-- The Global TECONS."
If a partial redemption of the TECONS would result in the delisting of the
TECONS by any national securities exchange or other organization on which the
TECONS are then listed, the Company pursuant to the Indenture will only redeem
Junior Subordinated Debentures in whole and, as a result, the Trust may only
redeem the TECONS in whole.
Subject to the foregoing and applicable law (including, without limitation,
United States Federal securities laws), the Company or any of its subsidiaries
may at any time and from time to time purchase outstanding TECONS by tender, in
the open market or by private agreement.
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
In the event of any voluntary or involuntary dissolution, liquidation,
winding-up or termination of the Trust, the holders of the TECONS and Common
Securities at the date of dissolution, winding-up or termination of the Trust
will be entitled to receive on a Pro Rata Basis solely out of the assets of the
Trust, after satisfaction of liabilities of creditors (to the extent not
satisfied by the Company as provided in the Declaration), an amount equal to the
aggregate of the stated liquidation amount of $50 per Trust Security plus
accrued and unpaid distributions thereon to the date of payment (such amount
being the "Liquidation Distribution"), unless, in connection with such
dissolution, liquidation, winding-up or termination, Junior Subordinated
Debentures in an aggregate principal amount equal to the aggregate stated
liquidation amount of such Trust Securities and bearing accrued and unpaid
interest in an amount equal to the accrued and unpaid distributions on such
Trust Securities, shall be distributed on a Pro Rata Basis to the holders of the
TECONS and Common Securities in exchange therefor.
If, upon any such dissolution, the Liquidation Distribution can be paid
only in part because the Trust has insufficient assets available to pay in full
the aggregate Liquidation Distribution, then the amounts payable directly by the
Trust on the TECONS and the Common Securities shall be paid on a Pro Rata Basis.
The holders of the Common Securities will be entitled to receive distributions
upon any such dissolution on a Pro Rata Basis with the holders of the TECONS,
except that if an Event of Default under the Declaration has occurred and is
continuing, the TECONS shall have a priority over the Common Securities with
respect to payment of the Liquidation Distribution.
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Pursuant to the Declaration, the Trust shall terminate: (i) on November 1,
2031, the expiration of the term of the Trust; (ii) when all of the Trust
Securities shall have been called for redemption and the amounts necessary for
redemption thereof shall have been paid to the holders of Trust Securities in
accordance with the terms of the Trust Securities; or (iii) when all of the
Junior Subordinated Debentures shall have been distributed to the holders of
Trust Securities in exchange for all of the Trust Securities in accordance with
the terms of the Trust Securities.
NO MERGER, CONSOLIDATION OR AMALGAMATION OF THE TRUST
The Trust may not consolidate, amalgamate, merge with or into, or be
replaced by, or convey, transfer or lease its properties and assets to, any
corporation or other entity.
DECLARATION EVENTS OF DEFAULT
An event of default under the Indenture (an "Indenture Event of Default")
constitutes an Event of Default under the Declaration with respect to the Trust
Securities; provided that pursuant to the Declaration, the holder of the Common
Securities will be deemed to have waived any such Event of Default with respect
to the Common Securities until all Events of Default with respect to the TECONS
have been cured or waived. Until all such Events of Default with respect to the
TECONS have been so cured or waived, the Property Trustee will be deemed to be
acting solely on behalf of the holders of the TECONS, and only the holders of
the TECONS will have the right to direct the Property Trustee with respect to
certain matters under the Declaration and consequently under the Indenture. In
the event that any Event of Default with respect to the TECONS is waived by the
holders of the TECONS as provided in the Declaration, the holders of Common
Securities pursuant to the Declaration have agreed that such waiver also
constitutes a waiver of such Event of Default with respect to the Common
Securities for all purposes under the Declaration without any further act, vote
or consent of the holders of the Common Securities. See "Voting Rights" below.
Upon the occurrence of an Event of Default, the Property Trustee as the
holder of all of the Junior Subordinated Debentures will have the right under
the Indenture to declare the principal of and interest on the Junior
Subordinated Debentures to be immediately due and payable. In addition, the
Property Trustee will have the power to exercise all rights, powers and
privileges under the Indenture. See "Description of the Junior Subordinated
Debentures."
REGISTRATION RIGHTS
In connection with the Original Offering, the Trust and the Company agreed
with the Initial Purchasers, for the benefit of the holders of the TECONS, that
the Company will use its reasonable best efforts, and at its cost, to file on or
before the 90th day following the date of original issuance of the TECONS a
shelf registration statement (the "Shelf Registration Statement") with respect
to resales of the TECONS, the Guarantee, the Junior Subordinated Debentures and
the shares of AES Common Stock issuable upon conversion (the "Registrable
Securities") and to keep such registration statement effective until the earlier
of (i) the sale pursuant to such registration statement or Rule 144 under the
Securities Act of all the Registrable Securities and (ii) two years after the
date of the original issuance of the TECONS. Holders will be required to provide
certain information to the Company to be included in the registration statement
in order to use the prospectus for resales. The Company shall provide to each
holder copies of the prospectus, notify each holder when such registration
statement has become effective and take certain other actions as are required to
permit resales. In the event that (i) the Shelf Registration Statement is not
declared effective on or prior to the 180th day following the date of original
issuance of the TECONS or (ii) if use of the Shelf Registration Statement for
resales is suspended for any time during the two-year period after the date of
original issuance of the TECONS for a period in excess of 30 days during any
three-month period or 60 days during any 12-month period (each, a "permitted
black-out period"), then additional cumulative cash distributions (in addition
to amounts otherwise due on the TECONS) will accrue at an annual rate of $0.25
per TECONS for the first 90 days and increasing to $0.50 per TECONS thereafter
if clause (i) applies from April 28, 1998 until such
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registration statement is declared effective and if clause (ii) applies, then
during the period, other than any permitted black-out period, use is so
suspended. The Registration Statement of which this Prospectus is a part
constitutes the Shelf Registration Statement.
VOTING RIGHTS
Except as provided below, under "Modification and Amendment of the
Declaration" and "Description of the Guarantee" and as otherwise required by the
Business Trust Act, the Trust Indenture Act and the Declaration, the holders of
the TECONS will have no voting rights.
Subject to the requirements of this paragraph, the holders of a majority in
aggregate liquidation amount of the TECONS have the right (i) on behalf of all
holders of TECONS, to waive any past default that is waivable under the
Declaration and (ii) to direct the time, method and place of conducting any
proceeding for any remedy available to the Property Trustee, or exercising any
trust or power conferred upon the Property Trustee under the Declaration,
including the right to direct the Property Trustee, as the holder of the Junior
Subordinated Debentures, to (A) direct the time, method and place of conducting
any proceeding for any remedy available to the Indenture Trustee (as defined
herein), or executing any trust or power conferred on the Indenture Trustee with
respect to the Junior Subordinated Debentures, (B) waive any past default that
is waivable under Section 6.06 of the Indenture, or (C) exercise any right to
rescind or annul a declaration that the principal of all the Junior Subordinated
Debentures shall be due and payable; provided that where a consent under the
Indenture would require the consent of (a) holders of Junior Subordinated
Debentures representing a specified percentage greater than a majority in
principal amount of the Junior Subordinated Debentures or (b) each holder of
Junior Subordinated Debentures affected thereby, no such consent shall be given
by the Property Trustee without the prior consent of, in the case of clause (a)
above, holders of TECONS representing such specified percentage of the aggregate
liquidation amount of the TECONS or, in the case of clause (b) above, each
holder of all TECONS affected thereby. The Property Trustee shall not revoke any
action previously authorized or approved by a vote of the holders of TECONS. The
Property Trustee shall notify all holders of record of TECONS of any notice of
default received from the Indenture Trustee with respect to the Junior
Subordinated Debentures. Other than with respect to directing the time, method
and place of conducting any proceeding for any remedy available to the Property
Trustee or the Indenture Trustee as set forth above, the Property Trustee shall
be under no obligation to take any of the foregoing actions at the direction of
the holders of the TECONS unless the Property Trustee shall have obtained an
opinion of nationally recognized independent tax counsel recognized as expert in
such matters to the effect that the Trust will not be classified for United
States federal income tax purposes as an association taxable as a corporation or
a partnership on account of such action and will be treated as a grantor trust
for United States federal income tax purposes following such action. If the
Property Trustee fails to enforce its rights under the Declaration (including,
without limitation, its rights, powers and privileges as a holder of the Junior
Subordinated Debentures under the Indenture), any holder of TECONS may, to the
extent permitted by applicable law, after a period of 30 days has elapsed from
such holder's written request to the Property Trustee to enforce such rights,
institute a legal proceeding directly against the Company to enforce the
Property Trustee's rights under the Declaration, without first instituting a
legal proceeding against the Property Trustee or any other Person. In addition,
in case of an Event of Default which is attributed to the failure of the Company
to pay interest or principal on the Junior Subordinated Debentures, a holder of
TECONS may directly institute a proceeding for enforcement of payment to such
holder of the principal of, or interest on, the Junior Subordinated Debentures
having a principal amount equal to the aggregate liquidation amount of the
TECONS of such holder. See "-- Declaration Events of Default."
A waiver of an Indenture Event of Default by the Property Trustee at the
direction of holders of the TECONS will constitute a waiver of the corresponding
Event of Default under the Declaration in respect of the Trust Securities.
In the event the consent of the Property Trustee as the holder of the
Junior Subordinated Debentures is required under the Trust Indenture with
respect to any amendment, modification or termination of the Trust Indenture or
the Junior Subordinated Debentures, the Property Trustee shall request the
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direction of the holders of the Trust Securities with respect to such amendment,
modification or termination and shall vote with respect to such amendment,
modification or termination as directed by a majority in liquidation amount of
the Trust Securities voting together as a single class; provided, however, that
where any such amendment, modification or termination under the Indenture would
require the consent of holders of Junior Subordinated Debentures representing a
specified percentage greater than a majority in principal amount of the Junior
Subordinated Debentures, the Property Trustee may only give such consent at the
direction of the holders of Trust Securities representing such specified
percentage of the aggregate liquidation amount of the Trust Securities; and,
provided, further, that the Property Trustee shall be under no obligation to
take any such action in accordance with the directions of the holders of the
Trust Securities unless the Property Trustee has obtained an opinion of
nationally recognized independent tax counsel recognized as expert in such
matters to the effect that the Trust will not be classified for United States
federal income tax purposes as an association taxable as a corporation or a
partnership on account of such action and will be treated as a grantor trust for
United States Federal income tax purposes following such action.
Any required approval or direction of holders of TECONS may be given at a
separate meeting of holders of TECONS convened for such purpose, at a meeting of
all of the holders of Trust Securities or pursuant to written consent. The
Regular Trustees will cause a notice of any meeting at which holders of TECONS
are entitled to vote, or of any matter upon which action by written consent of
such holders is to be taken, to be mailed to each holder of record of TECONS.
Each such notice will include a statement setting forth (i) the date of such
meeting or the date by which such action is to be taken; (ii) a description of
any resolution proposed for adoption at such meeting on which such holders are
entitled to vote or of such matter upon which written consent is sought; and
(iii) instructions for the delivery of proxies or consents.
No vote or consent of the holders of TECONS will be required for the Trust
to redeem and cancel TECONS or distribute Junior Subordinated Debentures in
accordance with the Declaration.
Notwithstanding that holders of TECONS are entitled to vote or consent
under any of the circumstances described above, any of the TECONS at such time
that are owned by the Company or by any entity directly or indirectly
controlling or controlled by or under direct or indirect common control with the
Company shall not be entitled to vote or consent and shall, for purposes of such
vote or consent, be treated as if they were not outstanding.
The procedures by which persons owning TECONS registered in the name of and
held by DTC or its nominee may exercise their voting rights are described under
"-- The Global TECONS" below. Holders of the TECONS will have no rights to
increase or decrease the number of Trustees or to appoint, remove or replace a
Trustee, which rights are vested exclusively in the holders of the Common
Securities.
MODIFICATION AND AMENDMENT OF THE DECLARATION
The Declaration may be modified and amended on approval of a majority of
the Regular Trustees, provided, that, if any proposed modification or amendment
provides for, or the Regular Trustees otherwise propose to effect, (a) any
action that would adversely affect the powers, preferences or special rights of
the Trust Securities, whether by way of amendment to the Declaration or
otherwise, or (b) the dissolution, winding-up or termination of the Trust other
than pursuant to the terms of the Declaration, then the holders of the
outstanding Trust Securities as a class will be entitled to vote on such
amendment or proposal and such amendment or proposal shall not be effective
except with the approval of at least a majority in liquidation amount of the
Trust Securities, provided that if any amendment or proposal referred to above
would adversely affect only the TECONS or the Common Securities, then only the
affected class will be entitled to vote on such amendment or proposal and such
amendment or proposal shall not be effective except with the approval of a
majority in liquidation amount of such class of Securities.
Notwithstanding the foregoing, (i) no amendment or modification may be made
to the Declaration unless the Regular Trustees shall have obtained (a) either a
ruling from the Internal Revenue Service or a written unqualified opinion of
nationally recognized independent tax counsel experienced in such
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matters to the effect that such amendment will not cause the Trust to be
classified for United States federal income tax purposes as an association
taxable as a corporation or a partnership and to the effect that the Trust will
continue to be treated as a grantor trust for purposes of United States federal
income taxation and (b) a written unqualified opinion of nationally recognized
independent counsel experienced in such matters to the effect that such
amendment will not cause the Trust to be an "investment company" which is
required to be registered under the 1940 Act; (ii) certain specified provisions
of the Declaration may not be amended without the consent of all of the holders
of the Trust Securities; (iii) no amendment which adversely affects the rights,
powers and privileges of the Property Trustee shall be made without the consent
of the Property Trustee; (iv) Article IV of the Declaration relating to the
obligation of the Company to purchase the Common Securities and to pay certain
obligations and expenses of the Trust may not be amended without the consent of
the Company; and (v) the rights of holders of Common Securities under Article V
of the Declaration to increase or decrease the number of, and to appoint,
replace or remove, Trustees shall not be amended without the consent of each
holder of Common Securities.
The Declaration further provides that it may be amended without the consent
of the holders of the Trust Securities to (i) cure any ambiguity; (ii) correct
or supplement any provision in the Declaration that may be defective or
inconsistent with any other provision of the Declaration; (iii) to add to the
covenants, restrictions or obligations of the Company; and (iv) to conform to
changes in, or a change in interpretation or application of certain 1940 Act
requirements by the Commission, which amendment does not adversely affect the
rights, preferences or privileges of the holders.
DEBTS AND OBLIGATIONS
In the Declaration, the Company has agreed to pay for all debts and
obligations (other than with respect to the Trust Securities) and all costs and
expenses of AES Trust, including the fees and expenses of its Trustees and any
taxes and all costs and expenses with respect thereto, to which AES Trust may
become subject, except for United States withholding taxes. The foregoing
obligations of the Company under each Declaration are for the benefit of, and
shall be enforceable by, any person to whom any such debts, obligations, costs,
expenses and taxes are owed (a "Creditor") whether or not such Creditor has
received notice thereof. Any such Creditor may enforce such obligations of the
Company directly against the Company and the Company has irrevocably waived any
right or remedy to require that any such Creditor take any action against AES
Trust or any other person before proceeding against the Company. The Company has
agreed in each Declaration to execute such additional agreements as may be
necessary or desirable in order to give full effect to the foregoing.
BOOK-ENTRY; DELIVERY AND FORM
The following describes the delivery and order of TECONS in connection with the
Originial Offering and transactions in TECONS which are not being or have not
been resold under this Prospectus.
The certificates representing the TECONS have been issued in fully
registered form. TECONS resold in offshore transactions in reliance on
Regulation S under the Securities Act are represented by a single, permanent
global TECONS in definitive, fully registered form (the "Regulation S Global
TECONS") deposited with the Property Trustee as custodian for DTC and registered
in the name of a nominee of DTC for the accounts of Euroclear and Cedel.
TECONS resold in reliance on Rule 144A are represented by a single,
permanent global TECONS in definitive, fully registered form (the "Restricted
Global TECONS") deposited with the Trustee as custodian for DTC and registered
in the name of a nominee of DTC. The Restricted Global TECONS (and any TECONS
issued in exchange therefor) are subject to certain restrictions on transfer set
forth therein and will bear a legend regarding such restrictions. Beneficial
interests in the Restricted Global TECONS may be transferred to a person who
takes delivery in the form of an interest in the Regulation S Global TECONS only
upon receipt by the Trustee of a written certification to the effect that such
transfer is being made in accordance with Regulation S under the Securities Act.
After the TECONS have been registered and resold under the Securities Act, all
certification requirements with respect to the TECONS will cease.
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Resales Under this Prospectus
TECONS resold under the Registration Statement of which this Prospectus
forms a part will be represented by a single, permanent global TECONS in
definitive, fully registered form (the "Unrestricted Global TECONS" and with the
Regulation S Global TECONS and the Restricted Global TECONS, the "Global
TECONS"), which is deposited with the Property Trustee as custodian for DTC and
registered in the name of a nominee of DTC.
Upon each sale by a Selling Holder of TECONS (or the Junior Subordinated
Debentures or shares of AES Common Stock into which the TECONS or Junior
Subordinated Debentures, as the case may be, may be converted) offered hereby,
such Selling Holder will be required to deliver a notice (the "Notice") of such
sale to the Property Trustee and the Company. The Notice will, among other
things, identify the sale as a sale pursuant to the Registration Statement of
which this Prospectus forms a part, certify that the prospectus delivery
requirements, if any, of the Securities Act have been satisfied, and certify
that the Selling Holder and the number of TECONS (or Junior Subordinated
Debentures or shares of AES Common Stock, as the case may be) are identified in
the Prospectus in accordance with the applicable rules and regulations under the
Securities Act. A copy of the Notice is included herein in Appendix A.
Additional copies may be requested form the Company, Attention: William R.
Luraschi, General Counsel and Secretary, 1001 North 19th Street, Arlington,
Virginia 22209, telephone number (703) 522-1315.
Upon receipt by the Property Trustee of the Notice relating to a sale of
TECONS, an appropriate adjustment will be made to reflect a decrease in the
principal amount of the Restricted Global TECONS or the Regulation S Global
TECONS, as the case may be, or the cancellation of a TECONS in certificated form
upon the transfer thereof, and a corresponding increase in the principal amount
of the Unrestricted Global TECONS.
Transfers between Global Securities
Any beneficial interest in one of the Global TECONS that is transferred to
a person who takes delivery in the form of an interest in the other Global
TECONS, will, upon transfer, cease to be an interest in such Global TECONS and
become an interest in the other Global TECONS, and, accordingly, will thereafter
be subject to all transfer restrictions, if any, and other procedures applicable
to beneficial interest in such other Global TECONS for as long as it remains
such interest. Except in the limited circumstances described under "The Global
TECONS," owners of beneficial interests in Global TECONS will not be entitled to
receive physical delivery of Certificated TECONS (as defined below). The TECONS
are not issuable in bearer form.
Resales to Institutional Accredited Investors
TECONS which are not resold under this Prospectus and which are transferred
to Institutional Accredited Investors who are not qualified institutional buyers
("Non-Global Purchaser") will be issued in registered form ("Certificated
TECONS"). Upon the transfer of Certificated TECONS initially issued to a
Non-Global Purchaser either to a qualified institutional buyer or in accordance
with Regulation S, such Certificated TECONS will, unless the relevant Global
TECONS has previously been exchanged in whole for Certificated TECONS, be
exchanged for an interest in a Global TECONS.
THE GLOBAL TECONS
Upon the issuance of the Global TECONS, DTC or its custodian have credited
or will credit, on its internal system, the respective principal amount of the
individual beneficial interests represented by such Global TECONS to the
accounts of persons who have accounts with such depository. Such accounts were
initially designated by or on behalf of the Initial Purchasers. Ownership of
beneficial interests in the Global TECONS will be limited to persons who have
accounts with DTC ("participants") or persons who hold interests through
participants. Ownership of beneficial interests in the Global TECONS will be
shown on, and the transfer of that ownership will be effected only through,
records maintained by, DTC or its nominee (with respect to interests of
participants) and the records of participants (with respect to
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interest of persons other than participants). Investors may hold their interest
in the Global TECONS directly through DTC if they are participants in such
system, or indirectly through organizations which are participants in such
system.
Investors may hold their interests in the Regulation S Global TECONS
directly through Cedel or Euroclear, if they are participants in such systems,
or indirectly through organizations that are participants in such systems.
Investors may also hold such interests through organizations other than Cedel or
Euroclear that are participants in the DTC system. Cedel and Euroclear will hold
interests in the Regulation S Global TECONS on behalf of their participants
through DTC.
So long as DTC, or its nominee, is the registered owner or holder of the
Global TECONS, DTC or such nominee, as the case may be, will be considered the
sole owner or holder of the TECONS represented by such Global TECONS for all
purposes under the Trust Agreement and the TECONS. No beneficial owner of an
interest in the Global TECONS will be able to transfer that interest except in
accordance with the procedures provided for under "Book Entry; Delivery and
Form," as well as DTC's applicable procedures and, if applicable, those of
Euroclear and Cedel.
Payments of the principal of, and interest on, the Global TECONS will be
made to DTC or its nominee, as the case may be, as the registered owner thereof.
None of the Company, the Trust or any paying agent will have any responsibility
or liability for any aspect of the records relating to or payments made on
account of beneficial ownership interests in the Global TECONS or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests.
The Company expects that DTC or its nominee, upon receipt of any payment of
principal or interest in respect of the Global TECONS will credit participants'
accounts with payments in accounts proportionate to their respective beneficial
interests in the principal amount of the Global TECONS as shown on the records
of DTC or its nominee. The Company also expects that payments by participants to
owners of beneficial interests in the Global TECONS held through such
participants will be governed by standing instructions and customary practices,
as is now the case with securities held for the accounts of customers registered
in the name of nominees for such customers. Such payments will be the
responsibility of such participants.
Transfers between participants in DTC will be effected in the ordinary way
in accordance with DTC rules and will be settled in same-day funds. If a holder
requires physical delivery of a Certificated TECONS for any reason, including to
sell TECONS to persons in states which require such delivery of such TECONS or
to pledge such TECONS, such holder must transfer its interest in the Global
TECONS in accordance with the normal procedures of DTC and the procedures set
forth in "Book Entry; Delivery and Form." Transfers between participants in
Euroclear and Cedel will be effected in the ordinary way in accordance with
their respective rules and operating procedures.
DTC has advised the Company that it will take any action permitted to be
taken by a holder of TECONS (including the presentation of TECONS for exchange
as described below) only at the direction of one or more participants to whose
accounts the DTC interests in the Global TECONS is credited and only in respect
of such portion of the aggregate liquidation amount of TECONS as to which such
participant or participants has or have given such direction.
The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of securities in definite form. Such laws may
impair the ability to transfer beneficial interests in the Global TECONS as
represented by a global certificate.
DTC is a limited-purpose trust company organized under the New York banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"). DTC holds securities that its
participants ("Participants") deposit with DTC. DTC also facilitates the
settlement among Participants of securities transactions, such as transfers and
pledges, in deposited securities without electronic computerized book-entry
changes in Participants' accounts, thereby eliminating the need for physical
movement of securities certification.
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Direct Participants include securities brokers and dealers, banks, trust
companies, clearing corporations and certain other organizations ("Direct
Participants"). DTC is owned by a number of its Direct Participants and by the
Nasdaq National Market, the American Stock Exchange, Inc., and the National
Association of Securities Dealers, Inc. Access to the DTC System is also
available to others, such as securities brokers and dealers, banks and trust
companies that clear transaction through or maintain a direct or indirect
custodial relationship with a Direct Participant either directly or indirectly
("Indirect Participants"). The rules applicable to DTC and its Participants are
on file with the Securities and Exchange Commission.
Conversion and redemption notices shall be sent to DTC or its nominee. If
less than all of the TECONS of a Direct Participant are being converted or
redeemed, DTC or such nominee will reduce the amount of the interest of each
Direct Participant in such TECONS in accordance with its normal procedures.
Although voting with respect to the TECONS is limited, in those cases where
a vote is required, neither DTC nor its nominee will itself consent or vote with
respect to TECONS. Under its usual procedures, DTC would mail an Omnibus Proxy
to the Trust as soon as possible after the record date. The Omnibus Proxy
assigns consenting or voting rights to those Direct Participants to whose
accounts the TECONS are credited on the record date (identified in a listing
attached to the Omnibus Proxy). AES and the Trust believe that the arrangements
among DTC, Direct and Indirect Participants, and Beneficial Owners will enable
the Beneficial Owners to exercise rights equivalent in substance to the rights
that can be directly exercised by a holder of a beneficial interest in the
Trust.
Although DTC, Euroclear and Cedel have agreed to the foregoing procedures
in order to facilitate transfers of interest in the Global TECONS among
participants of DTC, Euroclear and Cedel, they are under no obligation to
perform or continue to perform such procedures, and such procedures may be
discontinued at any time. Neither the Company nor the Property Trustee will have
any responsibility for the performance by DTC, Euroclear or Cedel or their
respective obligations under the rules and procedures governing their
operations. IF DTC discontinues being the Depositary and a successor Depositary
is not obtained, certificates for the TECONS are required to be printed and
delivered. Additionally, the Regular Trustees (with the consent of AES) may
decide to discontinue use of the system of book-entry transfers through DTC (or
any successor Depositary) with respect to the TECONS. In that event,
certificates for the TECONS will be printed and delivered.
The information in this section concerning DTC, Euroclear and Cedel and
DTC's book-entry system has been obtained from sources that AES and the Trust
believe to be reliable, but neither AES nor the Trust takes responsibility for
the accuracy thereof.
CONVERSION AGENT, REGISTRAR, TRANSFER AGENT AND PAYING AGENT
The Property Trustee will act as Conversion Agent. In addition, in the
event the TECONS do not remain in book-entry only form, the following provisions
will apply:
Payment of distributions and payments on redemption of the TECONS will be
payable, the transfer of the TECONS will be registrable, and TECONS will be
exchangeable for TECONS of other denominations of a like aggregate liquidation
amount, at the corporate trust office of the Property Trustee in New York, New
York; provided that payment of distributions may be made at the option of the
Regular Trustees on behalf of the Trust by check mailed to the address of the
persons entitled thereto and that the payment on redemption of any TECONS will
be made only upon surrender of such TECONS to the Property Trustee.
The First National Bank of Chicago or one of its affiliates will act as
registrar and transfer agent for the TECONS. The First National Bank of Chicago
will also act as paying agent and, with the consent of the Regular Trustees, may
designate additional paying agents.
Registration of transfers of TECONS will be effected without charge by or
on behalf of the Trust, but upon payment (with the giving of such indemnity as
the Trust or the Company may require) in respect of any tax or other
governmental charges that may be imposed in relation to it.
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The Trust will not be required to register or cause to be registered the
transfer of TECONS after such TECONS have been called for redemption.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The Property Trustee, prior to a default with respect to the Trust
Securities, undertakes to perform only such duties as are specifically set forth
in the Declaration and, after default, shall exercise the same degree of care as
a prudent individual would exercise in the conduct of his or her own affairs.
Subject to such provision, the Property Trustee is under no obligation to
exercise any of the powers vested in it by the Declaration at the request of any
holder of TECONS, unless offered reasonable indemnity by such holder against the
costs, expenses and liabilities which might be incurred thereby. The Property
Trustee is not required to expend or risk its own funds or otherwise incur
personal financial liability in the performance of its duties if the Property
Trustee reasonably believes that repayment or adequate indemnity is not
reasonably assured to it.
The Company and certain of its affiliates maintain a deposit account and
banking relationship with the Property Trustee.
GOVERNING LAW
The Declaration and the TECONS are governed by, and will be construed in
accordance with, the internal laws of the State of Delaware.
MISCELLANEOUS
The Regular Trustees are authorized and directed to take such action as
they deem reasonable in order that the Trust will not be deemed to be an
"investment company" required to be registered under the 1940 Act or that the
Trust will not be classified for United States federal income tax purposes as an
association taxable as a corporation or a partnership and will be treated as a
grantor trust for United States federal income tax purposes. In this connection,
the Regular Trustees are authorized to take any action, not inconsistent with
applicable law, the certificate of trust or the Declaration, that the Regular
Trustees determine in their discretion to be reasonable and necessary or
desirable for such purposes, as long as such action does not adversely affect
the interests of holders of the Trust Securities.
The Company and the Regular Trustees on behalf of the Trust will be
required to provide to the Property Trustee annually a certificate as to whether
or not the Company and the Trust, respectively, is in compliance with all the
conditions and covenants under the Declaration.
DESCRIPTION OF THE GUARANTEE
Set forth below is a summary of information concerning the Guarantee
executed and delivered by the Company for the benefit of the holders from time
to time of TECONS. The Guarantee has been separately qualified under the Trust
Indenture Act and is held by The First National Bank of Chicago, acting in its
capacity as indenture trustee with respect thereto, for the benefit of holders
of the TECONS. The terms of the Guarantee are those set forth in the Guarantee
and those made part of such Guarantee by the Trust Indenture Act. This
description summarizes the material terms of the Guarantee and is qualified in
its entirety by reference to the Guarantee (a copy of which has been included as
an exhibit to the Registration Statement of which this Prospectus Offering is a
part) and the Trust Indenture Act. Section and Article references used herein
are references to the provisions of the Guarantee.
GENERAL
Pursuant to the Guarantee, the Company will irrevocably and unconditionally
agree, to the extent set forth therein, to pay in full, to the holders of the
TECONS, the Guarantee Payments (as defined herein) (without duplication of
amounts theretofore paid by AES Trust), to the extent not paid by AES Trust,
regardless of any defense, right of set-off or counterclaim that AES Trust may
have or assert. The following payments or distributions with respect to TECONS
to the extent not paid or made by AES
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Trust (the "Guarantee Payments"), will be subject to the Guarantee (without
duplication): (i) any accrued and unpaid distributions on TECONS, and the
redemption price, including all accrued and unpaid distributions to the date of
redemption, with respect to any TECONS called for redemption by AES Trust but if
and only to the extent that in each case the Company has made a payment to the
Property Trustee of interest or principal on the Junior Subordinated Debentures
deposited in AES Trust as trust assets and (ii) upon a voluntary or involuntary
dissolution, winding-up or termination of AES Trust (other than in connection
with the distribution of such Junior Subordinated Debentures to the holders of
TECONS or the redemption of all of the TECONS upon the maturity or redemption of
such Junior Subordinated Debentures) the lesser of (a) the aggregate of the
liquidation amount and all accrued and unpaid distributions on the TECONS to the
date of payment, to the extent AES Trust has funds available therefor or (b) the
amount of assets of AES Trust remaining available for distribution to holders of
the TECONS in liquidation of AES Trust. The Company's obligation to make a
Guarantee Payment may be satisfied by direct payment of the required amounts by
the Company to the holders of TECONS or by causing AES Trust to pay such amounts
to such holders.
The Guarantee is a guarantee from the time of issuance of the TECONS, but
the Guarantee covers distributions and other payments on the TECONS only if and
to the extent that the Company has made a payment to the Property Trustee of
interest or principal on the Junior Subordinated Debentures deposited in AES
Trust as trust assets. If the Company does not make interest or principal
payments on the Junior Subordinated Debentures deposited in AES Trust as trust
assets, the Property Trustee will not make distributions of the TECONS and AES
Trust will not have funds available therefor.
The Company's obligations under the Declaration, the Guarantee issued with
respect to TECONS, the Junior Subordinated Debentures purchased by the Trust and
the Indenture in the aggregate will provide a full and unconditional guarantee
on a subordinated basis by the Company of payments due on the TECONS.
CERTAIN COVENANTS OF THE COMPANY
In the Guarantee, has covenanted that, so long as any TECONS issued by AES
Trust remain outstanding, the Company will not (A) declare or pay any dividends
on, or redeem, purchase, acquire or make a distribution or liquidation payment
with respect to, any of its common stock or preferred stock or make any
guarantee payment with respect thereto or (B) make any payment of interest,
premium (if any) or principal on any debt securities issued by the Company which
rank pari passu with or junior to the Junior Subordinated Debentures, if at such
time (i) the Company shall be in default with respect to its Guarantee Payments
or other payment obligations under the Guarantee, (ii) there shall have occurred
any Declaration Event of Default under the Declaration or (iii) in the event
that Junior Subordinated Debentures are issued to AES Trust in connection with
the issuance of Trust Securities, the Company shall have given notice of its
election to defer payments of interest on such Junior Subordinated Debentures by
extending the interest payment period as provided in the terms of the Junior
Subordinated Debentures and such period, or any extension thereof, is
continuing: provided that the foregoing will not apply to stock dividends paid
by the Company in its Common Stock. In addition, so long as any TECONS remain
outstanding, the Company has agreed (i) to remain the sole direct or indirect
owner of all of the outstanding Common Securities issued by AES Trust and shall
not cause or permit the Common Securities to be transferred except to the extent
permitted by the related Declaration; provided that any permitted successor of
the Company under the Indenture may succeed to the Company's ownership of the
Common Securities issued by the applicable AES Trust and (ii) to use reasonable
efforts to cause such AES Trust to continue to be treated as a grantor trust for
United States federal income tax purposes except in connection with a
distribution of Junior Subordinated Debentures.
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes that do not adversely affect the rights
of holders of TECONS (in which case no consent will be required), the Guarantee
may be amended only with the prior approval of the holders of not less than a
majority in liquidation amount of the outstanding TECONS issued by AES Trust.
All guarantees and agreements contained in the Guarantee shall bind the succes-
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sors, assignees, receivers, trustees and representatives of the Company and
shall inure to the benefit of the holders of the TECONS then outstanding. Except
in connection with a consolidation, merger or sale involving the Company that is
permitted under the Indenture, the Company may not assign its obligations under
the Guarantee.
TERMINATION OF THE GUARANTEE
The Guarantee will terminate and be of no further force and effect as to
the TECONS upon full payment of the redemption price of all the TECONS, or upon
distribution of the Junior Subordinated Debentures to the holders of the TECONS
in exchange for all of the TECONS, or upon full payment of the amounts payable
upon liquidation of AES Trust. Notwithstanding the foregoing, the Guarantee will
continue to be effective or will be reinstated, as the case may be, if at any
time any holder of TECONS must restore payment of any sums paid under the TECONS
or the Guarantee.
The Company's obligations under the Guarantee to make the Guarantee
Payments will constitute an unsecured obligation of the Company and will rank
subordinate and junior in right of payment to all other liabilities of the
Company, including the Junior Subordinated Debentures, except those made pari
passu or subordinate by their terms, and pari passu in right of payment with the
most senior preferred stock issued, from time to time, if any, by the Company.
The Company's obligations under the Guarantee will rank pari passu with other
Preferred Securities Guarantees of the Company. Because the Company is a holding
company, the Company's obligations under the Guarantee are also effectively
subordinated to all existing and future liabilities, including trade payables,
of the Company's subsidiaries, except to the extent that the Company is a
creditor of the subsidiaries recognized as such. The Declaration provides that
each TECONS holder's acceptance thereof agrees to the subordination provisions
and other terms of the Guarantee.
STATUS OF THE GUARANTEE
The Guarantee will constitute a guarantee of payment and not of collection
(that is, the guaranteed party may institute a legal proceeding directly against
the guarantor to enforce its rights under the guarantee without first
instituting a legal proceeding against any other person or entity). The
Guarantee will be deposited with The First National Bank of Chicago, as
indenture trustee, to be held for the benefit of the holders of the TECONS
issued by AES Trust. The First National Bank of Chicago shall enforce the
Guarantee on behalf of the holders of the TECONS. The holders of not less than a
majority in aggregate liquidation amount of the TECONS have the right to direct
the time, method and place of conducting any proceeding for any remedy available
in respect of the Guarantee, including the giving of directions to The First
National Bank of Chicago. If The First National Bank of Chicago fails to enforce
the Guarantee as above provided, any holder of TECONS may institute a legal
proceeding directly against the Company to enforce its rights under the
Guarantee, without first instituting a legal proceeding against AES Trust or any
other person or entity. Notwithstanding the foregoing, if the Company has failed
to make a guarantee payment, a holder of TECONS may directly institute a
proceeding against the Company for enforcement of the Guarantee for such
payment.
MISCELLANEOUS
The Company will be required to provide annually to The First National Bank
of Chicago a statement as to the performance by the Company of certain of its
obligations under the Guarantee and as to any default in such performance. The
Company is required to file annually with The First National Bank of Chicago an
officer's certificate as to the Company's compliance with all conditions under
the Guarantee.
The First National Bank of Chicago, prior to the occurrence of a default,
undertakes to perform only such duties as are specifically set forth in the
Guarantee and, after default with respect to the Guarantee, shall exercise the
same degree of care as a prudent individual would exercise in the conduct of his
or her own affairs. Subject to such provision, The First National Bank of
Chicago is under no obligation to exercise any of the powers vested in it by the
Guarantee at the request of any holder of TECONS unless it is offered reasonable
indemnity against the costs, expenses and liabilities that might be incurred
thereby.
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GOVERNING LAW
The Guarantee is governed by, and will be construed in accordance with, the
laws of the State of New York.
DESCRIPTION OF THE JUNIOR SUBORDINATED DEBENTURES
Set forth below is a description of the Junior Subordinated Debentures in
which the Trust has invested the proceeds from the issuance and sale of the
Trust Securities and which have been deposited in the Trust as trust assets. The
terms of the Junior Subordinated Debentures include those stated in the
Indenture dated as of March 1, 1997 between the Company and The First National
Bank of Chicago, as trustee (the "Indenture Trustee"), as supplemented by the
Second Supplemental Indenture dated as of October 29, 1997 between the Company
and the Indenture Trustee (as so supplemented, the "Trust Indenture" or the
"Indenture") copies of which have been included as exhibits to the Registration
Statement of which this Prospectus forms a part. The following description does
not purport to be complete and is qualified in its entirety by reference to the
Indenture and the Trust Indenture Act. Whenever particular provisions or defined
terms in the Indenture are referred to herein, such provisions or defined terms
are incorporated by reference herein.
The Indenture does not limit the aggregate principal amount of indebtedness
which may be issued thereunder and provides that junior subordinated debentures
may be issued thereunder from time to time in one or more series (collectively,
together with the Junior Subordinated Debentures, the "Subordinated
Debentures"). The Junior Subordinated Debentures constitute a separate series
under the Indenture.
Under certain circumstances involving the dissolution of the Trust
following the occurrence of a Special Event, Junior Subordinated Debentures may
be distributed to the holders of the Trust Securities in liquidation of the
Trust. See "Description of the TECONS -- Special Event Redemption or
Distribution."
GENERAL
The Junior Subordinated Debentures are unsecured, subordinated obligations
of the Company, limited in aggregate principal amount to an amount equal to the
sum of (i) the stated liquidation amount of the TECONS issued by the Trust and
(ii) the proceeds received by the Trust upon issuance of the Common Securities
to the Company (which proceeds will be used to purchase an equal principal
amount of Junior Subordinated Debentures). Since the Company is a holding
company, the Company's rights and the rights of its creditors, including the
holders of Junior Subordinated Debentures to participate in the assets of any
subsidiary upon the latter's liquidation or recapitalization will be subject to
the prior claims of the subsidiary's creditors, except to the extent that the
Company may itself be a creditor with recognized claims against the subsidiary.
The entire principal amount of the Junior Subordinated Debentures will
become due and payable, together with any accrued and unpaid interest thereon,
on September 30, 2012. The Junior Subordinated Debentures are not subject to any
sinking fund.
If Junior Subordinated Debentures are distributed to holders of TECONS in
dissolution of the Trust, such Junior Subordinated Debentures will initially be
issued as a Global Security (as defined below). As described herein, under
certain limited circumstances, Junior Subordinated Debentures may be issued in
certificated form in exchange for a Global Security. See "Book-Entry and
Settlement" below. In the event that Junior Subordinated Debentures are issued
in certificated form, such Junior Subordinated Debentures will be in
denominations of $50 and integral multiples thereof and may be transferred or
exchanged at the offices described below. Payments on Junior Subordinated
Debentures issued as a Global Security will be made to DTC, a successor
depositary or, in the event that no depositary is used, to a paying agent for
the Junior Subordinated Debentures.
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In the event that Junior Subordinated Debentures are issued in certificated
form, payments of principal and interest will be payable, the transfer of the
Junior Subordinated Debentures will be registrable, and Junior Subordinated
Debentures will be exchangeable for Junior Subordinated Debentures of other
denominations of a like aggregate principal amount, at the corporate trust
office of the Indenture Trustee in New York, New York; provided that payment of
interest may be made at the option of the Company by check mailed to the address
of the persons entitled thereto and that the payment of principal with respect
to any Junior Subordinated Debenture will be made only upon surrender of such
Junior Subordinated Debenture to the Indenture Trustee.
SUBORDINATION
The payment of principal of, premium, if any, and interest on the Junior
Subordinated Debentures will, to the extent and in the manner set forth in the
Indenture, be subordinated in right of payment to the prior payment in full, in
cash or cash equivalents, of all Senior and Subordinated Debt of the Company.
Upon any payment or distribution of assets to creditors upon any
liquidation, dissolution, winding up, receivership, reorganization, assignment
for the benefit of creditors, marshalling of assets and liabilities or any
bankruptcy, insolvency or similar proceedings of the Company, the holders of all
Senior and Subordinated Debt will first be entitled to receive payment in full
of all amounts due or to become due thereon before the holders of the Junior
Subordinated Debentures will be entitled to receive any payment in respect of
the principal of, premium, if any, or interest on the Junior Subordinated
Debentures.
No payments on account of principal, premium, if any, or interest in
respect of the Junior Subordinated Debentures may be made by the Company if
there shall have occurred and be continuing a default in any payment with
respect to Senior and Subordinated Debt or during certain periods when an event
of default under certain Senior and Subordinated Debt permits the lenders
thereunder to accelerate the maturity of such Senior and Subordinated Debt. In
addition, during the continuance of any other event of default (other than a
payment default) with respect to Designated Senior and Subordinated Debt
pursuant to which the maturity thereof may be accelerated, from and after the
date of receipt by the Trustee of written notice from holders of such Designated
Senior and Subordinated Debt or from an agent of such holders, no payments on
account of principal, premium, if any, or interest in respect of the Junior
Subordinated Debentures may be made by the Company during a period (the "Payment
Blockage Period") commencing on the date of delivery of such notice and ending
179 days thereafter (unless such Payment Blockage Period shall be terminated by
written notice to the Trustee from the holders of such Designated Senior and
Subordinated Debt or from an agent of such holders, or such event of default has
been cured or waived or has ceased to exist). Only one Payment Blockage Period
may be commenced with respect to the Junior Subordinated Debentures during any
period of 360 consecutive days. No event of default which existed or was
continuing on the date of the commencement of any Payment Blockage Period with
respect to the Designated Senior and Subordinated Debt initiating such Payment
Blockage Period shall be or be made the basis for the commencement of any
subsequent Payment Blockage Period by the holders of such Designated Senior and
Subordinated Debt, unless such event of default shall have been cured or waived
for a period of not less than 90 consecutive days.
By reason of such subordination, in the event of insolvency, funds that
would otherwise be payable to holders of Junior Subordinated Debentures will be
paid to the holders of Senior and Subordinated Debt of the Company to the extent
necessary to pay such Debt in full, and the Company may be unable to meet fully
its obligations with respect to the Junior Subordinated Debentures.
"Debt" is defined to mean, with respect to any person at any date of
determination (without duplication), (i) all indebtedness of such person for
borrowed money, (ii) all obligations of such person evidenced by bonds,
debentures, notes or other similar instruments, (iii) all obligations of such
person in respect of letters of credit or bankers' acceptance or other similar
instruments (or reimbursement obligations with respect thereto), (iv) all
obligations of such person to pay the deferred purchase price of property or
services, except trade payables, (v) all obligations of such person as lessee
under capitalized leases, (vi) all Debt of others secured by a lien on any asset
of such person, whether or not such Debt is
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assumed by such person; provided that, for purposes of determining the amount of
any Debt of the type described in this clause, if recourse with respect to such
Debt is limited to such asset, the amount of such Debt shall be limited to the
lesser of the fair market value of such asset or the amount of such Debt, (vii)
all Debt of others guaranteed by such person to the extent such Debt is
guaranteed by such person, (viii) all redeemable stock valued at the greater of
its voluntary or involuntary liquidation preference plus accrued and unpaid
dividends and (ix) to the extent not otherwise included in this definition, all
obligations of such person under currency agreements and interest rate
agreements.
"Designated Senior and Subordinated Debt" is defined to mean (i) Debt under
the Credit Agreement dated as of May 20, 1996 (the "Credit Agreement") among the
Company, the Banks named on the signature pages thereof and the Morgan Guaranty
Trust Company of New York, as agent for the banks, as such Credit Agreement has
been and may be amended, restated, supplemented or otherwise modified from time
to time and (ii) Debt constituting Senior and Subordinated Debt which, at the
time of its determination, (A) has an aggregate principal amount of at least $30
million and (B) is specifically designated in the instrument evidencing such
Senior and Subordinated Debt as "Designated Senior and Subordinated Debt" by the
Company.
"Senior and Subordinated Debt" is defined to mean the principal of (and
premium, if any) and interest on all Debt of the Company whether created,
incurred or assumed before, on or after the date of the Indenture; provided that
such Senior and Subordinated Debt shall not include (i) Debt of the Company to
any Affiliate, (ii) Debt of the Company that, when incurred and without respect
to any election under Section 1111(b) of Title 11, U.S. Code, was without
recourse, (iii) any other Debt of the Company which by the terms of the
instrument creating or evidencing the same are specifically designated as not
being senior in right of payment to the Junior Subordinated Debentures, and in
particular the Junior Subordinated Debentures shall rank pari passu with all
other debt securities and guarantees issued to any trust, partnership or other
entity affiliated with the Company which is a financing vehicle of the Company
in connection with an issuance of preferred securities by such financing entity,
and (iv) redeemable stock of the Company.
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OPTIONAL REDEMPTION
Except as provided below, the Junior Subordinated Debentures may not be
redeemed prior to September 30, 2000. AES shall have the right to redeem the
Junior Subordinated Debentures, in whole or in part, from time to time, on or
after September 30, 2000, upon not less than 30 nor more than 60 days notice, at
the following prices (expressed as percentages of the principal amount of the
Junior Subordinated Debentures) together with accrued and unpaid interest,
including Compound Interest to, but excluding, the redemption date, if redeemed
during the 12-month period beginning September 30:
<TABLE>
<CAPTION>
YEAR REDEMPTION PRICE
- ------------- -----------------
<S> <C>
2000............................................ 103.438%
2001............................................ 102.750%
2002............................................ 102.063%
2003............................................ 101.375%
2004............................................ 100.688%
</TABLE>
and 100% if redeemed on or after September 30, 2005.
If the Junior Subordinated Debentures are redeemed on any Interest Payment
Date (as defined below), accrued and unpaid interest shall be payable to holders
of record on the relevant record date.
So long as the corresponding TECONS are outstanding, the proceeds from the
redemption of any Junior Subordinated Debentures will be used to redeem TECONS.
The Company will also have the right to redeem the Junior Subordinated
Debentures at any time upon the occurrence of a Tax Event if certain conditions
are met as described under "Description of the TECONS -- Special Event
Redemption or Distribution."
The Company may not redeem any Junior Subordinated Debentures unless all
accrued and unpaid interest thereon, including Compounded Interest, has been
paid for all quarterly periods terminating on or prior to the date of notice of
redemption.
If the Company gives a notice of redemption in respect of Junior
Subordinated Debentures (which notice will be irrevocable), then, by 12:00 noon,
New York City time, on the redemption date, the Company will deposit irrevocably
with the Indenture Trustee funds sufficient to pay the applicable Redemption
Price and will give irrevocable instructions and authority to pay such
Redemption Price to the holders of the Junior Subordinated Debentures. If notice
of redemption shall have been given and funds deposited as required, then upon
the date of such deposit, interest will cease to accrue on the Junior
Subordinated Debentures called for redemption, such Junior Subordinated
Debentures will no longer be deemed to be outstanding and all rights of holders
of such Junior Subordinated Debentures so called for redemption will cease,
except the right of the holders of such Junior Subordinated Debentures to
receive the applicable Redemption Price, but without interest on such Redemption
Price. If any date fixed for redemption of Junior Subordinated Debentures is not
a Business Day, then payment of the Redemption Price payable on such date will
be made on the next succeeding day that is a Business Day (and without any
interest or other payment in respect of any such delay) except that, if such
Business Day falls in the next calendar year, such payment will be made on the
immediately preceding Business Day, in each case with the same force and effect
as if made on such date fixed for redemption. If the Company fails to repay the
Junior Subordinated Debentures on maturity or the date fixed for this
redemption, or if payment of the Redemption Price in respect of Junior
Subordinated Debentures is improperly withheld or refused and not paid by the
Company, interest on such Junior Subordinated Debentures will continue to
accrue, from the original redemption date to the date of payment, in which case
the actual payment date will be considered the date fixed for redemption for
purposes of calculating the applicable Redemption Price. If fewer than all of
the Junior Subordinated Debentures are to be redeemed, the Junior Subordinated
Debentures to be redeemed shall be selected by lot or pro rata or in some other
equitable manner determined by the Indenture Trustee.
In the event of any redemption in part, the Company shall not be required
to (i) issue, register the transfer of or exchange any Junior Subordinated
Debentures during a period beginning at the opening of business 15 days before
any selection for redemption of Junior Subordinated Debentures and ending
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at the close of business on the earliest date on which the relevant notice of
redemption is deemed to have been given to all holders of Junior Subordinated
Debentures to be redeemed and (ii) register the transfer of or exchange any
Junior Subordinated Debentures so selected for redemption, in whole or in part,
except the unredeemed portion of any Junior Subordinated Debentures being
redeemed in part.
INTEREST
The Junior Subordinated Debentures will bear interest at the rate of 5.50%
per annum from October 29, 1997. Interest will be payable quarterly in arrears
on the last day of each calendar quarter (each, an "Interest Payment Date"),
commencing on December 31, 1997, to the person in whose name such Junior
Subordinated Debenture is registered, subject to certain exceptions, at the
close of business on the Business Day next preceding such Interest Payment Date.
In the event (i) the TECONS shall not continue to remain in book-entry only form
or (ii) if following distribution of the Junior Subordinated Debentures to
holders of Trust Securities upon dissolution of the Trust as described under
"Description of the TECONS", the Junior Subordinated Debentures shall not
continue to remain in book-entry only form, the relevant record date will be the
fifteenth day of the month in which the relevant Interest Payment Date occurs.
Interest payable on any Junior Subordinated Debenture that is not punctually
paid or duly provided for on any Interest Payment Date will forthwith cease to
be payable to the person in whose name such Junior Subordinated Debenture is
registered on the relevant record date, and such defaulted interest will instead
be payable to the person in whose name such Junior Subordinated Debenture is
registered on the special record date or other specified date determined in
accordance with the Indenture; provided, however, that interest shall not be
considered payable by the Company on any Interest Payment Date falling within an
Extension Period unless the Company has elected to make a full or partial
payment of interest accrued on the Junior Subordinated Debentures on such
Interest Payment Date.
The amount of interest payable for any period will be computed on the basis
of a 360-day year of twelve 30 day months. If any date on which interest is
payable on the Junior Subordinated Debentures is not a Business Day, then
payment of the interest payable on such date will be made on the next succeeding
day that is a Business Day (and without any interest or other payment in respect
of any such delay), except that, if such Business Day is in the next succeeding
calendar year, such payment shall be made on the immediately preceding Business
Day, in each case with the same force and effect as if made on such date.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
So long as the Company shall not be in default in the payment of interest
on the Junior Subordinated Debentures, the Company shall have the right to
extend the interest payment period from time to time for a period not exceeding
20 consecutive quarters. The Company has no current intention of exercising its
right to extend an interest payment period. No interest shall be due and payable
during an Extension Period, except at the end thereof. During any Extension
Period, the Company shall not declare or pay any dividends on, or redeem,
purchase, acquire or make a distribution or liquidation payment with respect to,
any of its common stock or preferred stock or make any guarantee payments with
respect thereto; provided that the foregoing will not apply to stock dividends
payable in AES Common Stock paid by the Company. Prior to the termination of any
such Extension Period, the Company may further extend the interest payment
period; provided that such Extension Period together with all such previous and
further extensions thereof may not exceed 20 consecutive quarters or extend
beyond the maturity of the Junior Subordinated Debentures. On the Interest
Payment Date occurring at the end of each Extension Period, the Company shall
pay to the holders of Junior Subordinated Debentures of record on the record
date for such Interest Payment Date (regardless of who the holders of record may
have been on other dates during the Extension Period) all accrued and unpaid
interest on the Junior Subordinated Debentures, together with interest thereon
at the rate specified for the Junior Subordinated Debentures to the extent
permitted by applicable law, compounded quarterly. Upon the termination of any
Extension Period and the payment of all amounts then due, the Company may
commence a new Extension Period, subject to the above requirements. The Company
may also prepay at any time all or any portion of the interest accrued during an
Extension Period. Consequently, there
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could be multiple Extension Periods of varying lengths throughout the term of
the Junior Subordinated Debentures, not to exceed 20 consecutive quarters;
provided, that no such period may extend beyond the stated maturity of the
Junior Subordinated Debentures. The failure by the Company to make interest
payments during an Extension Period would not constitute a default or an event
of default under the Indenture or the Company's currently outstanding
indebtedness.
If the Property Trustee shall be the sole holder of the Junior Subordinated
Debentures, the Company shall give the Property Trustee notice of its selection
of such Extension Period one Business Day prior to the earlier of (i) the date
the distributions on the TECONS are payable or (ii) the date the Trust is
required to give notice to the NYSE or other applicable self-regulatory
organization or to holders of the TECONS of the record date or the date such
distribution is payable. The Trust shall give notice of the Company's selection
of such Extension Period to the holders of the TECONS.
If Junior Subordinated Debentures have been distributed to holders of Trust
Securities, the Company shall give the holders of the Junior Subordinated
Debentures notice of its selection of such Extension Period ten Business Days
prior to the earlier of (i) the next succeeding Interest Payment Date or (ii)
the date the Company is required to give notice to the NYSE (if the Junior
Subordinated Debentures are then listed thereon) or other applicable
self-regulatory organization or to holders of the Junior Subordinated Debentures
of the record or payment date of such related interest payment.
ADDITIONAL INTEREST
If at any time the Trust shall be required to pay any taxes, duties,
assessments or governmental charges of whatever nature (other than withholding
taxes) imposed by the U.S., or any other taxing authority, then, in any such
case, AES will pay as additional interest ("Additional Interest") on the Junior
Subordinated Debentures such additional amounts as shall be required so that the
net amounts received and retained by the Trust after paying any such taxes,
duties, assessments or other governmental charges will be equal to the amounts
the Trust would have received had no such taxes, duties, assessments or other
governmental charges been imposed.
CONVERSION OF THE JUNIOR SUBORDINATED DEBENTURES
The Junior Subordinated Debentures are convertible into AES Common Stock at
the option of the holders of the Junior Subordinated Debentures at any time
prior to the close of business on September 30, 2012 (or, in the case of Junior
Subordinated Debentures called for redemption, the close of business on the
Business Day prior to the Redemption Date) at the Initial Conversion Price
subject to the conversion price adjustments described under "Description of the
TECONS -- Conversion Rights." The Trust has agreed not to convert Junior
Subordinated Debentures held by it except pursuant to a notice of conversion
delivered to the Conversion Agent by a holder of TECONS. Upon surrender of a
TECONS to the Conversion Agent for conversion, the Trust will distribute Junior
Subordinated Debentures to the Conversion Agent on behalf of the holder of the
TECONS so converted, whereupon the Conversion Agent will convert such Junior
Subordinated Debentures to AES Common Stock on behalf of such holder. AES's
delivery to the holders of the Junior Subordinated Debentures (through the
Conversion Agent) of the fixed number of shares of AES Common Stock into which
the Junior Subordinated Debentures are convertible (together with the cash
payment, if any, in lieu of fractional shares) will be deemed to satisfy the
obligation of AES to pay the principal amount of the Junior Subordinated
Debentures so converted, and the accrued and unpaid interest thereon
attributable to the period from the last date to which interest has been paid or
duly provided for; provided, however, that if any Junior Subordinated Debenture
is converted after a record date for payment of interest, the interest payable
on the related Interest Payment Date with respect to such Junior Subordinated
Debenture shall be paid to the Trust (which will distribute such interest to the
converting holder) or other holder of Junior Subordinated Debentures, as the
case may be, despite such conversion.
COMPOUNDED INTEREST
Payments of Compounded Interest on the Junior Subordinated Debentures held
by the Trust will make funds available to pay any interest on distributions in
arrears in respect of the TECONS pursuant to the terms thereof.
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CERTAIN COVENANTS OF THE COMPANY APPLICABLE TO THE JUNIOR SUBORDINATED
DEBENTURES
If Junior Subordinated Debentures are issued to AES Trust in connection
with the issuance of Trust Securities by AES Trust, the Company will covenant in
the Indenture that, so long as the TECONS issued by AES Trust remain
outstanding, the Company will not declare or pay any dividends on, or redeem,
purchase, acquire or make a distribution or liquidation payment with respect to,
any of its common stock or preferred stock or make any guarantee payment with
respect to, any of its common stock or preferred stock or make any guarantee
payment with respect thereto if at such time (i) the Company shall be in default
with respect to its Guarantee Payments or other payment obligations under the
Guarantee, (ii) there shall have occurred any Indenture Event of Default with
respect to the Junior Subordinated Debentures or (iii) in the event that Junior
Subordinated Debentures are issued to AES Trust in connection with the issuance
of Trust Securities by AES Trust, the Company shall have given notice of its
election to defer payments of interest on such Junior Subordinated Debentures by
extending the interest payment period as provided in the terms of such Junior
Subordinated Debentures and such period, or any extension thereof, is
continuing; provided that (x) the Company will be permitted to pay accrued
dividends (and cash in lieu of fractional shares) upon the conversion of any
preferred stock of the Company as may be outstanding from time to time, in each
case in accordance with the terms of such stock and (y) the foregoing will not
apply to any stock dividends paid by the Company. In addition, if Junior
Subordinated Debentures are issued to AES Trust in connection with the issuance
of Trust Securities by AES Trust, for so long as TECONS remain outstanding, the
Company has agreed (i) to remain the sole direct or indirect owner of all of the
outstanding Common Securities issued by AES Trust and not to cause or permit the
Common Securities to be transferred except to the extent permitted by the
Declaration; provided that any permitted successor of the Company under the
Indenture may succeed to the Company's ownership of the Common Securities issued
by AES Trust, (ii) to comply fully with all of its obligations and agreements
contained in the related Declaration and (iii) not to take any action which
would cause AES Trust to cease to be treated as a grantor trust for United
States federal income tax purposes, except in connection with a distribution of
Junior Subordinated Debentures.
INDENTURE EVENTS OF DEFAULT
The Indenture provides that any one or more of the following described
events, which has occurred and is continuing, constitutes an "Indenture Event of
Default" with respect to each series of Junior Subordinated Debentures:
(a) failure for 30 days to pay interest on the Junior Subordinated
Debentures of such series when due; provided that a valid extension
of the interest payment period by the Company shall not constitute a
default in the payment of interest for this purpose;
(b) failure to pay principal of or premium, if any, on the Junior
Subordinated Debentures of such series when due whether at maturity,
upon redemption, by declaration or otherwise;
(c) failure to observe or perform any other covenant contained in the
Indenture with respect to such series for 90 days after written
notice to the Company from the Indenture Trustee or the holders of at
least 25% in principal amount of the outstanding Junior Subordinated
Debentures of such series; or
(d) certain events in bankruptcy, insolvency or reorganization of the
Company.
In each and every such case, unless the principal of all the Junior
Subordinated Debentures of that series shall have already become due and
payable, either the Indenture Trustee or the holders of not less than 25% in
aggregate principal amount of the Junior Subordinated Debentures of that series
then outstanding, by notice in writing to the Company (and to the Indenture
Trustee if given by such holders), may declare the principal of all the Junior
Subordinated Debentures of that series to be due and payable immediately, and
upon any such declaration the same shall become and shall be immediately due and
payable. (Section 6.01)
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The holders of a majority in aggregate outstanding principal amount of the
Junior Subordinated Debentures of that series have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Indenture Trustee. (Section 6.06) The Indenture Trustee or the holders of not
less than 25% in aggregate outstanding principal amount of the Junior
Subordinated Debentures of that series may declare the principal due and payable
immediately upon an Indenture Event of Default with respect to such series, but
the holders of a majority in aggregate outstanding principal amount of Junior
Subordinated Debentures of such series may annul such declaration and waive the
default if the default has been cured and a sum sufficient to pay all matured
installments of interest and principal otherwise than by acceleration and any
premium has been deposited with the Indenture Trustee. (Sections 6.01 and 6.06)
The holders of a majority in aggregate outstanding principal amount of the
Junior Subordinated Debentures of that series may, on behalf of the holders of
all the Junior Subordinated Debentures of that series, waive any past default,
except a default in the payment of principal, premium, if any, or interest
(unless such default has been cured and a sum sufficient to pay all matured
installments of interest and principal otherwise than by acceleration and any
premium has been deposited with the Indenture Trustee) or a call for redemption
of Junior Subordinated Debentures. (Section 6.06) The Company is required to
file annually with the Indenture Trustee a certificate as to whether or not the
Company is in compliance with all the conditions and covenants under the
Indenture. (Section 5.03)
If Junior Subordinated Debentures are issued to AES Trust in connection
with the issuance of Trust Securities, then under the applicable Declaration an
Indenture Event of Default with respect to such series of Junior Subordinated
Debentures will constitute a Declaration Event of Default.
MODIFICATION OF THE INDENTURE
The Indenture contains provisions permitting the Company and the Indenture
Trustee, with the consent of the holders of not less than a majority in
principal amount of the outstanding Junior Subordinated Debentures of each
series affected, to modify the Indenture or any supplemental indenture affecting
the rights of the holders of such Junior Subordinated Debentures; provided that
no such modification may, without the consent of the holder of each outstanding
Junior Subordinated Debenture affected thereby, (i) extend the fixed maturity of
any Junior Subordinated Debentures of any series, reduce the principal amount
thereof, reduce the rate or extent the time of payment of interest thereon,
reduce any premium payable upon the redemption thereof, without the consent of
the holder of each Junior Subordinated Debenture so affected or (ii) reduce the
percentage of Junior Subordinated Debentures, the holders of which are required
to consent to any such modification, without the consent of the holders of each
Junior Subordinated Debenture then outstanding and affected thereby. (Section
9.02)
CONSOLIDATION, MERGER AND SALE
The Indenture will provide that the Company may not consolidate with or
merge into any other person or transfer or lease its properties and assets
substantially as an entirety to any person and may not permit any person to
merge into or consolidate with the Company unless (i) either the Company will be
the resulting or surviving entity or any successor or purchaser is a corporation
organized under the laws of the United States of America, any State or the
District of Columbia, and any such successor or purchaser expressly assumes the
Company's obligations under the Indenture and (ii) immediately after giving
effect to the transaction no Event of Default shall have occurred and be
continuing. (Section 10.01)
DEFEASANCE AND DISCHARGE
Under the terms of the Indenture, the Company will be discharged from any
and all obligations in respect of the Junior Subordinated Debentures of a series
(except in each case for certain obligations to register the transfer or
exchange of such Junior Subordinated Debentures, replace stolen, lost or
mutilated Junior Subordinated Debentures of that series, maintain paying
agencies and hold moneys for payment in trust) if (i) the Company irrevocably
deposits with the Indenture Trustee cash or U.S.
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Government Obligations, as trust funds in an amount certified to be sufficient
to pay at maturity (or upon redemption) the principal of, premium, if any, and
interest on all outstanding Junior Subordinated Debentures of such series; (ii)
such deposit will not result in a breach or violation of, or constitute a
default under, any agreement or instrument to which the Company is a party or by
which it is bound; (iii) the Company delivers to the Indenture Trustee an
opinion of counsel to the effect that the holders of the Junior Subordinated
Debentures of such series will not recognize income, gain or loss for United
States federal income tax purposes as a result of such defeasance and that
defeasance will not otherwise alter holders' United States federal income tax
treatment of principal, premium and interest payments on such Junior
Subordinated Debentures of such series (such opinion must be based on a ruling
of the Internal Revenue Service or a change in United States federal income tax
law occurring after the date of the Indenture, since such a result would not
occur under current tax law); (iv) the Company has delivered to the Indenture
Trustee an Officer's Certificate and an opinion of counsel, each stating that
all conditions precedent provided for relating to the defeasance contemplated by
such provision have been complied with; and (v) no event or condition shall
exist that, pursuant to the subordination provisions applicable to such series,
would prevent the Company from making payments of principal of, premium, if any,
and interest on the Junior Subordinated Debentures of such series at the date of
the irrevocable deposit referred to above. (Section 11.01)
GOVERNING LAW
The Indenture and the Junior Subordinated Debentures are governed by the
laws of the State of New York. (Section 13.05)
INFORMATION CONCERNING THE INDENTURE TRUSTEE
The Indenture Trustee, prior to default, undertakes to perform only such
duties as are specifically set forth in the Indenture and, after default, shall
exercise the same degree of care as a prudent individual would exercise in the
conduct of his or her own affairs. (Section 7.01) Subject to such provision, the
Indenture Trustee is under no obligation to exercise any of the powers vested in
it by the Indenture at the request of any holder of Junior Subordinated
Debentures, unless offered reasonable indemnity by such holder against the
costs, expenses and liabilities that might be incurred thereby. (Section 7.02)
The Indenture Trustee is not required to expend or risk its own funds or
otherwise incur personal financial liability in the performance of its duties if
the Trustee reasonably believes that repayment or adequate indemnity is not
reasonably assured to it. (Section 7.01)
The Company and its subsidiaries maintain ordinary banking and trust
relationships with The First National Bank of Chicago and its affiliates.
MISCELLANEOUS
The Company will have the right at all times to assign any of its rights or
obligations under the Indenture to a direct or indirect wholly-owned subsidiary
of the Company; provided that, in the event of any such assignment, the Company
will remain jointly and severally liable for all such obligations. Subject to
the foregoing, the Indenture will be binding upon and inure to the benefit of
the parties thereto and their respective successors and assigns. The Indenture
provides that it may not otherwise be assigned by the parties thereto other than
by the Company to a successor or purchaser pursuant to a consolidation, merger
or sale permitted by the Indenture. (Section 13.11)
BOOK-ENTRY AND SETTLEMENT
If distributed to holders of TECONS in connection with the involuntary or
voluntary dissolution, winding-up or liquidation of the Trust as a result of the
occurrence of a Special Event, the Junior Subordinated Debentures will be issued
(i) if to owners of beneficial interests in the Global TECONS, in the form of
one or more global certificates (each, a "Global Security") registered in the
name of the Depositary or its nominee or (ii) if to holders of certificated
TECONS, in registered form (each, a "Certificated Security"). Except under the
limited circumstances described below, Junior Subordinated
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Debentures represented by the Global Security will not be exchangeable for, and
will not otherwise be issuable as, Junior Subordinated Debentures in definitive
form. The Global Securities described above may not be transferred except by the
Depositary to a nominee of the Depositary or by a nominee of the Depositary to
the Depositary or another nominee of the Depositary or to a successor Depositary
or its nominee.
The laws of some jurisdictions require that certain purchasers or
securities take physical delivery of such securities in definitive form. Such
laws may impair the ability to transfer beneficial interests in such a Global
Security.
Except as provided herein, owners of beneficial interests in such a Global
Security will not be entitled to receive physical delivery of Junior
Subordinated Debentures in definitive form and will not be considered the
holders (as defined in the Indenture) thereof for any purpose under the
Indenture and no Global Security representing Junior Subordinated Debentures
shall be exchangeable, except for another Global Security of like denomination
and tenor to be registered in the name of the Depositary or its nominee.
Accordingly, each beneficial owner of an interest in a Global Security must rely
on the procedures of the Depositary, or, if such person is not a Participant, on
the procedures of the Participant through which such person owns its interest,
to exercise any rights of a holder under the Indenture.
THE DEPOSITARY
If Junior Subordinated Debentures are distributed to holders of TECONS in
liquidation of such holders' interests in the Trust, DTC will act as Depositary
for the Junior Subordinated Debentures. For a description of DTC and the
specific terms of the Depositary arrangements, see "Description of the TECONS --
The Global TECONS." As of the date of this Prospectus, the description therein
of DTC's book-entry system and DTC's and Euroclear's and Cedel's practices as
they relate to purchases, transfers, notices and payments with respect to the
TECONS apply in all material respects to any debt obligations represented by one
or more Global Securities held by the Company. The Company may appoint a
successor to DTC or any successor Depositary in the event DTC or such successor
Depositary is unable or unwilling to continue as a Depositary for the Global
Securities.
None of the Company, the Trust, the Property Trustee, any paying agent and
any other agent of the Company or the Indenture Trustee will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in a Global Security
for such Junior Subordinated Debentures or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
DISCONTINUANCE OF THE DEPOSITARY'S SERVICES
A Global Security shall be exchangeable for Junior Subordinated Debentures
registered in the names of persons other than the Depositary or its nominee only
if (i) the Depositary notifies the Company that it is unwilling or unable to
continue as a depositary for such Global Security and no successor depositary
shall have been appointed, (ii) the Depositary, at any time, ceases to be a
clearing agency registered under the Exchange Act, at which time the Depositary
is required to be so registered to act as such depositary and no successor
depositary shall have been appointed, (iii) the Company, in its sole discretion,
determines that such Global Security shall be so exchangeable or (iv) there
shall have occurred an Event of Default with respect to such Junior Subordinated
Debentures. Any Global Security that is exchangeable pursuant to the preceding
sentence shall be exchangeable for Junior Subordinated Debentures registered in
such names as the Depositary shall direct. It is expected that such instructions
will be based upon directions received by the Depositary from its Participants
with respect to ownership of beneficial interests in such Global Security.
RELATIONSHIP BETWEEN THE TECONS, THE JUNIOR
SUBORDINATED DEBENTURES AND THE GUARANTEE
As set forth in the Declaration, the Trust exists for the sole purpose of
(a) issuing the Trust Securities evidencing undivided beneficial interests in
the assets of the Trust, and investing the proceeds from such issuance and sale
in the Junior Subordinated Debentures and (b) engaging in such other activities
as are necessary and incidental thereto.
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As long as payments of interest and other payments are made when due on the
Junior Subordinated Debentures, such payments will be sufficient to cover
distributions and other payments due on the TECONS primarily because (i) the
aggregate principal amount of Junior Subordinated Debentures held as trust
assets will be equal to the sum of the aggregate stated liquidation amount of
the TECONS and the proceeds received by the Trust upon issuance of the Common
Securities to the Company; (ii) the interest rate and interest and other payment
dates on the Junior Subordinated Debentures will match the distribution rate and
distribution and other payment dates for the TECONS; (iii) the Declaration
provides that the Company shall pay for all debts and obligations (other than
with respect to the Trust Securities) and all costs and expenses of the Trust,
including any taxes and all costs and expenses with respect thereto, to which
the Trust may become subject, except for United States withholding taxes; and
(iv) the Declaration further provides that the Trustees shall not cause or
permit the Trust, among other things, to engage in any activity that is not
consistent with the limited purposes of the Trust. With respect to clause (iii)
above, however, no assurance can be given that the Company will have sufficient
resources to enable it to pay such debts, obligations, costs and expenses on
behalf of the Trust.
Payments of distributions and other payments due on the TECONS are
guaranteed by the Company on a subordinated basis as and to the extent set forth
under "Description of the Guarantee." If the Company does not make interest or
other payments on the Junior Subordinated Debentures, the Trust will not make
distributions or other payments on the TECONS. Under the Declaration, if and to
the extent the Company does make interest or other payments on the Junior
Subordinated Debentures, the Property Trustee is obligated to make distributions
or other payments on the TECONS. The Guarantee is a full and unconditional
guarantee from the time of issuance of the TECONS, but the Guarantee covers
distributions and other payments on the TECONS only if and to the extent that
the Company has made a payment to the Property Trustee of interest or principal
on the Junior Subordinated Debentures deposited in the Trust as trust assets.
The Property Trustee will have the Power to exercise all rights, powers and
privileges under the Indenture with respect to the Junior Subordinated
Debentures, including its rights as the holder of the Junior Subordinated
Debentures to enforce the Company's obligations under the Junior Subordinated
Debentures upon the occurrence of an Indenture Event of Default, and will also
have the right to enforce the Guarantee on behalf of the holders of the TECONS.
In addition, the holders of at least a majority in liquidation amount of the
TECONS will have the right to direct the Property Trustee with respect to
certain matters under the Declaration and the Guarantee. If the Property Trustee
fails to enforce its rights under the Trust Indenture any holder of TECONS may,
after a period of 30 days has elapsed from such holder's written request to the
Property Trustee to enforce such rights, institute a legal proceeding against
the Company to enforce such rights. If the Property Trustee fails to enforce the
Guarantee, to the extent permitted by applicable law, any holder of TECONS may
institute a legal proceeding directly against the Company to enforce the
Property Trustee's rights under the Guarantee. Notwithstanding the foregoing, if
the Company has failed to make a guarantee payment, a holder of TECONS may
directly institute a proceeding against the Company for enforcement of the
Guarantee for such payment. See "Description of the TECONS" and "Description of
the Guarantee."
The above mechanisms and obligations, taken together, provide a full and
unconditional guarantee by the Company of payments due on the TECONS.
CERTAIN FEDERAL TAX CONSEQUENCES
In the opinion of Davis Polk & Wardwell, counsel to the Company and the
Trust, the following are the material United States federal income tax
consequences of the ownership and disposition of TECONS. Unless otherwise
stated, this summary deals only with TECONS held as capital assets by holders
who acquire the TECONS upon original issuance at the price indicated on the
cover of this Prospectus. It does not deal with special classes of holders, such
as dealers in securities or currencies, life insurance companies, persons
holding TECONS as part of a straddle or as part of a hedging or conversion
transaction, or persons whose functional currency is not the United States
dollar. This summary is
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based on the Internal Revenue Code of 1986, as amended (the "Code"), Treasury
Regulations thereunder and administrative and judicial interpretations thereof
as of the date hereof, all of which are subject to change (possibly on a
retroactive basis).
INVESTORS ARE ADVISED TO CONSULT THEIR TAX ADVISORS AS TO THE UNITED STATES
FEDERAL INCOME TAX CONSEQUENCES OF THE OWNERSHIP AND DISPOSITION OF TECONS IN
LIGHT OF THEIR PARTICULAR CIRCUMSTANCES, AS WELL AS THE EFFECT OF ANY STATE,
LOCAL OR OTHER TAX LAWS.
CLASSIFICATION OF THE JUNIOR SUBORDINATED DEBENTURES
The Company intends to take the position that the Junior Subordinated
Debentures will be classified for United States federal income tax purposes as
indebtedness. However, no assurance can be given, that this characterization
will not be challenged by the Internal Revenue Service or the courts. The
remainder of this discussion assumes that the characterization of the Junior
Subordinated Debentures as indebtedness of the Company will be respected.
CLASSIFICATION OF THE TRUST
Davis Polk & Wardwell, counsel to the Company and the Trust, will render
its opinion generally to the effect that, assuming full compliance with the
terms of the Declaration, the Trust will be classified for United States federal
income tax purposes as a grantor trust and not as an association taxable as a
corporation. Accordingly, each holder of TECONS will be considered the owner of
a pro rata portion of the Junior Subordinated Debentures held by the Trust and
will be required to include in gross income its pro rata share of income accrued
on the Junior Subordinated Debentures.
ACCRUAL OF ORIGINAL ISSUE DISCOUNT
The Junior Subordinated Debentures will be considered to have been issued
with "original issue discount" ("OID"). Accordingly, each holder of TECONS,
including a taxpayer who otherwise uses the cash method of accounting, will be
required to include its pro rata share of original issue discount on the Junior
Subordinated Debentures in income as it accrues, in accordance with a constant
yield method based on a compounding of interest, before the receipt of cash
distributions on the TECONS. Generally, all of a holder's taxable interest
income with respect to the Junior Subordinated Debentures will be accounted for
as "original issue discount" and actual distributions of stated interest will
not be separately reported as taxable income. So long as the interest payment
period is not extended, cash distributions received by a holder for any
quarterly interest period (assuming no disposition prior to the record date for
such distribution) will generally equal the sum of the daily accruals of income
for such quarterly interest period.
The total amount of "original issue discount" on the Junior Subordinated
Debentures will equal the difference between the "issue price" of the Junior
Subordinated Debentures and their "stated redemption price at maturity." Because
the Company has the right to extend the interest payment period of the Junior
Subordinated Debentures, all of the stated interest payments on the Junior
Subordinated Debentures will be includable in determining their "stated
redemption price at maturity." The "issue price" of each $50 principal amount of
Junior Subordinated Debentures will be equal to the first price to the public at
which a substantial amount of the TECONS is sold for cash, which is expected to
be $50.
A holder's initial tax basis for its pro rata share of the Junior
Subordinated Debentures will be equal to its pro rata share of their "issue
price," as defined above, and will be increased by original issue discount
accrued with respect to its pro rata share of the Junior Subordinated
Debentures, and reduced by the amount of cash distributions with respect
thereto. No portion of the amounts received on the TECONS will be eligible for
the dividends received deduction.
POTENTIAL EXTENSION OF PAYMENT PERIOD ON THE JUNIOR SUBORDINATED DEBENTURES
Holders of TECONS will continue to accrue original issue discount with
respect to their pro rata share of the Junior Subordinated Debentures during an
extended interest payment period ever though cash distributions on TECONS are
deferred. A holder who disposes of the TECONS during an ex-
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tended interest period may suffer a loss because the market will likely fall if
AES exercises its option to defer payments of interest on the Junior
Subordinated Debentures. See "Disposition of the TECONS" below. Furthermore, the
market value of the TECONS may not reflect the accumulated distributions that
will be paid at the end of the extended interest period, and a holder who sells
the TECONS during the extended interest period will not receive from AES any
cash related to the interest income the holder already accrued and included in
its taxable income under the OID rule (because that cash will be paid to the
holder of record at the end of the extended interest period).
DISTRIBUTION OF JUNIOR SUBORDINATED DEBENTURES TO HOLDERS OF TECONS
A distribution by the Trust of the Junior Subordinated Debentures as
described under the caption "Description of the TECONS -- Special Event
Redemption or Distribution" will be non-taxable and will result in the holder
receiving directly its pro rata share of the Junior Subordinated Debentures
previously held indirectly through the Trust, with a holding period and tax
basis equal to the holding period and adjusted tax basis such holder was
considered to have had in its pro rata share of the underlying Junior
Subordinated Debentures prior to such distribution.
DISPOSITION OF THE TECONS
Upon a sale, exchange or other disposition of the TECONS (including a
distribution of cash in redemption of a holder's TECONS upon redemption or
repayment of the underlying Junior Subordinated Debentures, but excluding the
distribution of Junior Subordinated Debentures), a holder will be considered to
have disposed of all or part of its pro rata share of the Junior Subordinated
Debentures, and will recognize capital gain or loss equal to the difference
between the amount realized and the holder's adjusted tax basis in its pro rata
share of the underlying Junior Subordinated Debentures deemed disposed of.
Holders are advised to consult their tax advisers regarding the taxation of
capital gains and losses.
The TECONS may trade at a price that does not fully reflect the value of
accrued but unpaid interest with respect to the underlying Junior Subordinated
Debentures. A holder who disposes of its TECONS between record dates for
payments of distributions thereon will nevertheless be required to include, as
OID income, the amount of any accrued but unpaid interest on the Junior
Subordinated Debentures through the date of disposition in income, and to add
such amount to its adjusted tax basis in its pro rata share of the underlying
Junior Subordinated Debentures deemed disposed of. Accordingly, such a holder
will recognize a capital loss to the extent the selling price (which may not
fully reflect the value of such accrued but unpaid interest) is less than the
holder's adjusted tax basis (which will include accrued but unpaid interest).
Subject to certain limited exceptions, capital losses cannot be applied to
offset ordinary income (including any previously included OID income) for United
States federal income tax purposes.
CONVERSION OF TECONS TO AES COMMON STOCK
A holder of TECONS will not recognize income, gain or loss upon the
conversion through the Conversion Agent, of Junior Subordinated Debentures into
AES Common Stock. A holder of TECONS will recognize gain upon the receipt of
cash in lieu of a fractional share of AES Common Stock equal to the amount of
cash received less such holder's tax basis in such fractional share. Such
holder's tax basis in the AES Common Stock received upon conversion will
generally be equal to such holder's tax basis in the TECONS delivered to the
Conversion Agent for exchange, less the basis allocated to any fractional share
for which cash is received. Such holder's holding period in the AES Common Stock
received upon conversion will generally include the holder's holding period of
the TECONS delivered to the Conversion Agent for exchange, except possibly with
respect to AES Common Stock received in respect of any accrued but unpaid OID.
ADJUSTMENT OF CONVERSION PRICE
Treasury Regulations promulgated under section 305 of the Code would treat
holders of TECONS as having received a constructive distribution from AES in
certain events pursuant to which the conversion rate of the Junior Subordinated
Debentures were adjusted. Therefore, under certain circumstances,
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a reduction in the conversion price for the Junior Subordinated Debentures may
result in deemed dividend income to holders of TECONS to the extent of the
current or accumulated earnings and profits of AES. Holders of TECONS are
advised to consult their tax advisors as to the income tax consequences of
adjustments in the conversion rate of TECONS.
INFORMATION REPORTING TO HOLDERS
The Trust will report the original issue discount that accrued during the
year with respect to the Junior Subordinated Debentures, and any gross proceeds
received by the Trust from the retirement or redemption of the Junior
Subordinated Debentures, annually to the holders of record of the TECONS and the
Internal Revenue Service. The Trust currently intends to deliver such reports to
holders of record prior to January 31 following each calendar year. It is
anticipated that persons who hold TECONS as nominees for beneficial holders will
report the required tax information to beneficial holders on Form 1099.
BACKUP WITHHOLDING
Payments made on, and proceeds from the sale of TECONS may be subject to a
"backup" withholding tax at a rate of 31% unless the holder complies with
certain identification requirements. Backup withholding is not an additional tax
and may be refunded or allowed as a credit against the holder's federal income
tax, provided the required information is timely filed with the Internal Revenue
Service.
UNITED STATES ALIEN HOLDERS
For purposes of this discussion, a "United States Alien Holder" is any
corporation, individual, partnership, estate or trust that is, for U.S. federal
income tax purposes, a foreign corporation, a nonresident alien individual, a
foreign partnership, or a non-resident fiduciary of a foreign estate or trust.
Payments on TECONS. As discussed above, the Company intends to take the
position that the Junior Subordinated Debentures will be classified for U.S.
federal income tax purposes as indebtedness of AES under current law; no
assurance can be given, however, that such position of the Company will not be
challenged by the Internal Revenue Service.
Assuming that the Junior Subordinated Debentures are classified for U.S.
federal income tax purposes as indebtedness of AES, under present U.S. federal
income tax law, payments by the Trust or any of its paying agents to any holder
of a TECONS who or which is a United States Alien Holder would not be subject to
U.S. federal withholding tax; provided, that, (a) the beneficial owner of the
TECONS does not actually or constructively own 10% or more of the total combined
voting power of all classes of stock of AES entitled to vote, (b) the beneficial
owner of the TECONS is not a controlled foreign corporation that is related to
AES through stock ownership, and (c) either (A) the beneficial owner of the
TECONS certifies to the Trust or its agent, under penalties of perjury, that it
is not a U.S. person and provides its name and address or (B) a securities
clearing organization, bank or other financial institution that holds customers'
securities in the ordinary course of its trade or business (a "Financial
Institution"), and holds the TECONS in such capacity, certifies to the Trust or
its agent, under penalties of perjury, that such statement has been received
from the beneficial owner by it or by a Financial Institution between it and the
beneficial owner and furnishes the Trust or its agent with a copy thereof.
If the Junior Subordinated Debentures were not classified for U.S. federal
income tax purposes as indebtedness of AES, payments by the Trust or any of its
paying agents to any holder of a TECONS who or which is a United States Alien
Holder would be subject to U.S. withholding tax at a 30% rate (or a lower rate
prescribed by an applicable tax treaty). Prospective investors that would be
United States Alien Holders should consult their tax advisors concerning the
possible application of these rules.
Dividends on AES Common Stock. Subject to the discussion below, dividends
paid to a United States Alien Holder of AES Common Stock generally will be
subject to withholding tax at a 30% rate or such lower rate as may be specified
by an applicable income tax treaty. For purposes of determining whether tax is
to be withheld at a 30% rate or at a reduced rate as specified by an income tax
treaty, the
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Company ordinarily will presume that dividends paid before December 31, 1998 to
an address in a foreign country are paid to a resident of such country, unless
the Company has knowledge that such a presumption is not warranted.
Under the recently finalized Treasury Regulations applicable to dividends
paid after December 31, 1998 (the "Final Regulations"), to obtain a reduced rate
of withholding under a treaty, a United States Alien Holder will generally be
required to provide an Internal Revenue Service form W-8 certifying its
entitlement to benefits under a treaty. The Regulations also provide special
rules to determine whether, for purposes of determining the applicability of a
tax treaty, dividends paid to a United States Alien Holder that is an entity
will be treated as having been paid to the entity or to those holding an
interest in that entity.
Generally, the Company must report to the U.S. Internal Revenue Service the
amount of dividends paid, the name and address of the recipient, and the amount,
if any, of tax withheld. A similar report is sent to the holder. Pursuant to tax
treaties or certain other agreements, the U.S. Internal Revenue Service may make
its reports available to tax authorities in the recipient's country of
residence.
Sale or Exchange of TECONS or AES Common Stock. A United States Alien
Holder (other than certain U.S. expatriates) will not be subject to U.S. federal
income tax on gain realized on a sale, exchange or other disposition of the
TECONS or AES Common Stock unless (i) the United States Alien Holder is an
individual who is present in the U.S. for 183 days or more in the taxable year
of disposition, and certain other conditions are satisfied; or (ii) AES is or
has been a "United States real property holding corporation" within the meaning
of section 897(c)(2) of the Code during the shorter of the United States Alien
Holder's holding period or the five year period ending on the date of the sale,
exchange or other disposition and certain other conditions are satisfied.
The Company believes that it is unlikely that it is or will be treated as a
"United States real property holding corporation" within the meaning of Section
897(c)(2) of the Code. Even if AES is treated as a United States real property
holding corporation, gain realized by a United States Alien Holder on a
disposition of TECONS or AES Common Stock will not be subject to U.S. federal
income tax so long as (i) the United States Alien Holder is deemed to have
beneficially owned, in the case of a disposition of AES Common Stock, less than
or equal to 5% of the AES Common Stock or, in the case of a disposition of
TECONS, less than or equal to 5% of the TECONS, and (ii) the AES Common Stock
and the TECONS are currently and will be, at the time of disposition, "regularly
traded" on an established securities market (within the meaning of Section
897(c)(3) of the Code and the temporary Treasury Regulations (the "Temporary
Regulations")). There can be no assurance that AES Common Stock or the TECONS
qualify or will continue to qualify as "regularly traded" on an established
securities market.
Effectively Connected Income. If a United States Alien Holder of TECONS or
AES Common Stock is engaged in a trade or business in the United States, and if
original issue discount accrued on the TECONS or dividends on such Common Stock
is effectively connected with the conduct of such trade or business, the United
States Alien Holder, although exempt from the withholding tax on distributions
on TECONS and dividends on AES Common Stock, will generally be subject to
regular United States income tax on the original issue discount and dividends
and on any gain realized on the sale, exchange or other disposition of TECONS or
AES Common Stock in the same manner as if it were a United States person. Such a
holder will be required to provide to the Company with a properly executed
Internal Revenue Service Form 4224 (or a successor form) in order to claim an
exemption from withholding tax. On or after December 31, 1998, to comply with
this requirement, the United States Alien Holder needs to also provide a valid
United States taxpayer identification number. In addition, if such United States
Alien Holder is a foreign corporation, it may be subject to a branch profits tax
equal to 30% (or a lower rate prescribed by an applicable treaty) of its
effectively connected earnings and profits for the taxable year.
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ERISA CONSIDERATIONS
GENERAL
A fiduciary of an employee benefit plan subject of Title I of ERISA should
consider fiduciary standards under ERISA in the context of the particular
circumstances of such plan before authorizing an investment in the TECONS. Such
fiduciary should consider whether the investment satisfies ERISA's
diversification and prudence requirements, whether the investment constitutes
unauthorized delegation of fiduciary authority and whether the investment is in
accordance with the documents and instruments governing the plan. In addition,
ERISA and the Code prohibit a wide range of transactions ("Prohibited
Transactions") involving the assets of a plan subject to ERISA or the assets of
an individual retirement account or plan subject to Section 4975 of the Code
(hereinafter an "ERISA Plan") and persons who have certain specified
relationships to the ERISA Plan ("parties in interest," within the meaning of
ERISA, and "disqualified persons," within the meaning of the Code). Such
transactions may require "correction" and may cause the ERISA Plan fiduciary to
incur certain liabilities and the parties in interest or disqualified persons to
be subject to excise taxes.
The acquisition of TECONS by any person who is using for such acquisition
the assets of an ERISA Plan shall constitute a representation by such person to
AES that (i) if AES is a "party in interest" or a "disqualified person" with
respect to such ERISA Plan, then such security is being acquired pursuant to an
exemption from the Prohibited Transaction rules under ERISA and the Code, and
(ii) AES is not a "fiduciary," within the meaning of Section 3(21) of ERISA and
the regulations thereunder, with respect to such person's interest in the TECONS
or the Junior Subordinated Debentures.
Governmental plans and certain church plans (each as defined under ERISA)
are not subject to the Prohibited Transaction rules. Such plans may, however, be
subject to federal, state or local laws or regulations which may affect their
investment in the TECONS. Any fiduciary of such a governmental or church plan
considering an investment in the TECONS should determine the need for, and the
availability, if necessary, of any exemptive relief under such laws or
regulations.
THE DISCUSSION HEREIN OF ERISA IS GENERAL IN NATURE AND IS NOT INTENDED TO
BE ALL INCLUSIVE. ANY FIDUCIARY OF AN ERISA PLAN, GOVERNMENTAL PLAN OR CHURCH
PLAN CONSIDERING AN INVESTMENT IN THE TECONS SHOULD CONSULT WITH ITS LEGAL
ADVISORS REGARDING THE CONSEQUENCES OF SUCH INVESTMENT.
PROHIBITED TRANSACTIONS
AES may be a party in interest or a disqualified person with respect to an
ERISA Plan investing in the TECONS, and, therefore, such investments by an ERISA
Plan may give rise to a Prohibited Transaction. Consequently, before investing
in the TECONS, any person who is, or who in acquiring such securities is using
the assets of, an ERISA Plan should determine that either a statutory or an
administrative exemption from the Prohibited Transaction rules discussed below
or otherwise available is applicable to such person's investment in the TECONS,
or that its investment in such securities will not result in a Prohibited
Transaction.
Certain statutory or administrative exemptions from the Prohibited
Transaction rules under ERISA and the Code may be available to an ERISA Plan
which is investing in the TECONS. Included among these exemptions are:
Prohibited Transaction Class Exemption ("PTCE") 90-1, regarding investments by
insurance company pooled separate accounts; PTCE 91-38, regarding investments by
bank collective investment funds; PTCE 84-14, regarding transactions effected by
qualified professional asset managers; PTCE 96-23, regarding transactions
effected by in-house asset managers; or PTCE 95-60, regarding investments by
insurance company general accounts.
TRUST ASSETS AS "PLAN ASSETS"
The Department of Labor has issued final regulations (the "Labor
Regulations") as to what constitutes assets of an employee benefit plan ("plan
asset") under ERISA. The Labor Regulations provide that, as a general rule, when
an ERISA Plan acquires an equity interest in an entity and such interest
65
<PAGE>
does not represent a "publicly offered security" nor a security issued by an
investment company registered under the Investment Company Act of 1940, the
ERISA Plan's assets include both the equity interest and an undivided interest
in each of the underlying assets of the entity, unless it is established either
that the entity in an operating company or that equity participation in the
entity by "benefit plan investors" is not "significant." For purposes of the
Labor Regulations, the Trust will not be an investment company nor an operating
company and the TECONS will not constitute a "publicly offered security." As
discussed below, after resales pursuant to the shelf registration statement, the
TECONS may qualify as "publicly offered securities" for purposes of the Labor
Regulations, but such result cannot be assured.
Under the Labor Regulations, equity participation by benefit plan investors
will not be considered "significant" on any date only if, immediately after the
most recent acquisition of TECONS, the aggregate interest in the TECONS held by
benefit plan investors will be less than 25% of the value of the TECONS.
Although it is possible that the equity participation by benefit plan investors
on any date will not be "significant" for purposes of the Labor Regulations,
such result cannot be assured. Consequently, if ERISA Plans or investors using
plan assets of ERISA plans purchase the TECONS, the Trust's assets could be
deemed to be "plan assets" of such ERISA Plan for purposes of the fiduciary
responsibility provisions of ERISA and the Code. Under ERISA, any person who
exercises any authority or control respecting the management or disposition of
the assets of an ERISA Plan is considered to be a fiduciary of such ERISA Plan.
For example, the Property Trustee could therefore become a fiduciary of the
ERISA Plans that invest in the TECONS and be subject to the general fiduciary
requirements of ERISA in exercising its authority with respect to the management
of the assets of the Trust. However, the Property Trustee will have only limited
discretionary authority with respect to the Trust's assets and the remaining
functions and the responsibilities performed by the Property Trustee will be for
the most part custodial and ministerial in nature. Inasmuch as the Property
Trustee or another person with authority or control respecting the management or
disposition of the Trust assets may become a fiduciary with respect to the ERISA
Plans that will purchase the TECONS, there may be an improper delegation by such
ERISA Plans of the responsibility to manage plan assets.
It is expected that TECONS will be distributed pursuant to an effective
registration statement under the Securities Act and they may subsequently be
registered under the Exchange Act. TECONS may qualify as "publicly offered
securities" under the Labor Regulations if, in addition to such distribution and
registration, they are also "widely held" and "freely transferable." Under the
Labor Regulations, a class of securities is "widely held" only if it is a class
of securities that is owned by 100 or more investors independent of the issuer
and of one another. Although it is possible that after distribution pursuant to
the shelf registration statement the TECONS will be "widely held," such result
cannot be assured. Whether a security is "freely transferable" for purposes of
the Labor Regulations is a factual question to be determined on the basis of all
relevant facts and circumstances. If after the distribution pursuant to the
shelf registration statement, the TECONS do not qualify as "publicly offered
securities," the "plan asset" considerations discussed in the immediately
preceding paragraph could continue to be applicable in connection with the
investment by ERISA Plans or investors' using plan assets of ERISA Plans.
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SELLING HOLDERS
The holders listed below and the beneficial owners of the TECONS and their
transferees, pledgees, donees or other successors, if not identified hereunder
then so identified in supplements to this Prospectus, are the Selling Holders
under this Prospectus. The following table sets forth, as of a recent
practicable date prior to the effectiveness of the Registration Statement of
which this Prospectus forms a part, certain information with respect to the
Selling Holders named below and the respective number of TECONS owned by each
Selling Holder that may be offered pursuant to this Prospectus. Such information
has been obtained from the Selling Holders, DTC and/or the Property Trustee.
<TABLE>
<CAPTION>
NUMBER OF
SELLING HOLDER TECONS
- ------------------- ----------
<S> <C>
[To Come] .........
Total ......... 6,000,000
=========
</TABLE>
None of the Selling Holders has, or within the past three years has had,
any position, office or other material relationship with the Trust or the
Company or any of their predecessors or affiliates other than Roger W. Sant, who
is Chairman of the Board of the Company. None of the Selling Holders owns any
shares of AES Common Stock, other than Roger W. Sant who owns [ ]% of the Common
Stock. Because the Selling Holders may, pursuant to this Prospectus, offer all
or some portion of the TECONS, the Junior Subordinated Debentures or the AES
Common Stock issuable upon conversion of the TECONS, no estimate can be given as
to the amount of the TECONS, the Junior Subordinated Debentures or the AES
Common Stock issuable upon conversion of the TECONS that will be held by the
Selling Holders upon termination of any such sales. In addition, the Selling
Holders identified above may have sold, transferred or otherwise disposed of all
or a portion of their TECONS, since the date on which they provided the
information regarding their TECONS, in transactions exempt from the registration
requirements of the Securities Act. See "Plan of Distribution."
Only Selling Holders identified above who beneficially own the Offered
Securities set forth opposite each such Selling Holder's name in the foregoing
table on the effective date of the Registration Statement of which this
Prospectus forms a part may sell such Offered Securities pursuant to the
Registration Statement. The Company may from time to time, in accordance with
the Registration Rights Agreement, include additional Selling Holders in
supplements to this Prospectus.
PLAN OF DISTRIBUTION
The Offered Securities may be sold from time to time to purchasers directly
by the Selling Holders. Alternatively, the Selling Holders may from time to time
offer the Offered Securities to or through underwriters, broker/dealers or
agents, who may receive compensation in the form of underwriting discounts,
concessions or commissions from the Selling Holders or the purchasers of such
securities for whom they may act as agents. The Selling Holders and any
underwriters, broker/dealers or agents that participate in the distribution of
Offered Securities may be deemed to be "underwriters" within the meaning of the
Securities Act, and any profit on the sale of such securities and any discounts,
commissions, concessions or other compensation received by any such underwriter,
broker/dealer or agent may be deemed to be underwriting discounts and
commissions under the Securities Act.
67
<PAGE>
The Offered Securities may be sold from time to time in one or more
transactions at fixed prices, at the prevailing market prices at the time of
sale, at varying prices determined at the time of sale or at negotiated prices.
The sale of Offered Securities may be effected in transactions (which may
involve crosses or block transactions) (i) on any national securities exchange
or quotation service on which the Offered Securities may be listed or quoted at
the time of sale, (ii) in the over-the-counter market, (iii) in transactions
otherwise than on such exchanges or in the over-the-counter market or (iv)
through the writing of options. At the time a particular offering of the Offered
Securities is made, a Prospectus Supplement, if required, will be distributed
which will set forth the aggregate amount and type of Offered Securities being
offered and the terms of the offering, including the name or names of any
underwriters, broker/dealers or agents, any discounts, commissions and other
terms constituting compensation from the Selling Holders and any discounts,
commissions or concessions allowed or reallowed or paid to broker/dealers.
To comply with the securities laws of certain jurisdictions, if applicable,
the Offered Securities will be offered or sold in such jurisdictions only
through registered or licensed brokers or dealers. In addition, in certain
jurisdictions the Offered Securities may not be offered or sold unless they have
been registered or qualified for sale in such jurisdictions or any exemption
from registration or qualification is available and is complied with.
The Selling Holders will be subject to applicable provisions of the
Exchange Act and the rules and regulations thereunder, which provisions may
limit the timing of purchases and sales of any of the Offered Securities by the
Selling Holders. The foregoing may affect the marketability of such securities.
The costs of the registration of the Offered Securities will be paid by the
Company, including, without limitation, Commission filing fees and expenses of
compliance with state securities or "blue sky" laws; provided, however, that the
Selling Holders will pay all underwriting discounts and selling commissions, if
any. The Selling Holders will be indemnified by the Company and the Trust,
jointly and severally against certain civil liabilities, including certain
liabilities under the Securities Act, or will be entitled to contribution in
connection therewith. The Company and the Trust will be indemnified by the
Selling Holders severally against certain civil liabilities, including certain
liabilities under the Securities Act, or will be entitled to contribution in
connection therewith.
The Trust does not intend to list the TECONS on any securities exchange.
The Trust has been advised by the Initial Purchasers, other than Unterburg
Harris, that they intend to make a market in them as permitted by applicable
laws and regulations. The Initial Purchasers are not obligated, however, to make
a market in the TECONS and any such market-making may be discontinued at any
time at the sole discretion of the Initial Purchasers. Accordingly, no assurance
can be given as to the liquidity of, or trading markets for, the TECONS.
LEGAL MATTERS
The validity of the Junior Subordinated Debentures, the Common Stock
issuable upon conversion of the TECONS, the Guarantee and certain matters
relating thereto and certain U.S. federal income taxation matters will be passed
upon for AES and AES Trust by Davis Polk & Wardwell, and the validity of the
TECONS will be passed upon for the Company and AES Trust by Richards, Layton &
Finger, Wilmington, Delaware, special Delaware counsel to the Company and AES
Trust.
EXPERTS
The financial statements as of December 31, 1996 and 1995 and for each of
the three years in the period ended December 31, 1996 incorporated by reference
in this Prospectus from the Company's Current Report on Form 8-K, filed November
6, 1997, have been audited by Deloitte & Touche LLP, independent auditors, as
stated in their report, which is incorporated herein by reference, and has been
so incorporated in reliance upon the report of such firm given upon their
authority as experts in accounting and auditing.
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<PAGE>
The financial statements of Companhia Energetica de Minas Gerais -- CEMIG
for the years ended December 31, 1996 and 1995, prepared in accordance with
accounting principles generally accepted in Brazil, incorporated by reference in
this Prospectus from Item 7 of the Current Report on Form 8-K of The AES
Corporation filed July 16, 1997, have been audited by Price Waterhouse Auditores
Independentes, Belo Horizonte, Brazil, independent accountants, as stated in
their report, which is incorporated herein by reference, and has been so
incorporated in reliance upon the report of such firm given upon their authority
as experts in accounting and auditing.
The financial statements of Companhia Centro-Oeste de Distribuicao de
Energia Electrica -- CEEE D2 (formerly Midwest Division of Companhia Estadual de
Energia Eletrica -- CEEE) as at and for the nine-month period ended September
30, 1997, prepared in accordance with accounting practices originating in
Brazil's Corporation Law, incorporated by reference in this Prospectus from Item
7 of the Current Report on Form 8-K of The AES Corporation, filed January 9,
1998, have been audited by Ernst & Young Auditores Independentes S.C., Porto
Alegre, Brazil, independent accountants, as stated in their report, which is
incorporated herein by reference, and has been so incorporated in reliance upon
the report of such firm given upon their authority as experts in accounting and
auditing.
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APPENDIX A
NOTICE OF TRANSFER
PURSUANT TO REGISTRATION STATEMENT
The First National Bank of Chicago
153 West 51st Street
5th Floor
New York, New York
Attention: Corporate Trust Services Divisions
The AES Corporation
1001 N. 19th Street
Arlington, Virginia 22209
Attention: General Counsel
Re: AES TRUST II (the "Trust") TECONS
THE AES CORPORATION (the "Company")
Dear Sirs:
Please be advised that has transferred
TECONS, (or 5.50% Junior Subordinated Debt Securities of the Company or
shares of Common Stock of the Company, issued in exchange for or upon
conversion of the TECONS) pursuant to an effective Registration Statement on
Form S-3 (File No. 333- ) filed by the Company and the Trust.
We hereby certify that the prospectus delivery requirements, if any, of the
Securities Act of 1933, as amended, have been satisfied and that the above-named
beneficial owner of the transferred securities is named as a "Selling Holder" in
the Prospectus dated , 1998 or in supplements thereto, and that the aggregate
amount of the securities transferred are (or are included in) the securities
listed in such Prospectus opposite such owner's name.
Dated: Very truly yours,
-------------------------
Name:
By: ---------------------
(Authorized Signature)
A-1
<PAGE>
[AES LOGO]
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the expenses in connection with the issuance
and distribution of the securities being registered, other than underwriting
discounts and commissions. All of the amounts shown are estimates, except the
SEC registration fee.
<TABLE>
<S> <C>
SEC Registration filing fee ............................ $88,500
Printing and engraving expenses ........................ $
Blue sky fees and expenses (including counsel) ......... $
Legal fees and expenses ................................ $
Fees of accountants .................................... $
Fees of trustee ........................................ $
-------
Total ............................................... $
=======
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
INDEMNIFICATION OF DIRECTORS AND OFFICERS OF THE COMPANY
Under the Company's By-Laws, and in accordance with Section 145 of the
Delaware General Corporation Law ("GCL"), the Company shall indemnify any person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than any action or suit by or in the
right of the Company to procure a judgment in its favor, which is hereinafter
referred to as a "derivative action") by reason of the fact that such person is
or was a director, officer or employee of the Company, or is or was serving in
such capacity or as an agent at the request of the Company for another entity,
to the full extent authorized by Delaware law, against expenses (including, but
not limited to, attorneys' fees), judgments, fines and amounts actually and
reasonably incurred in connection with the defense or settlement of such action,
suit or proceeding if such person acted in good faith and in a manner the person
reasonably believed to be in or not opposed to the best interests of the
Company, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe was unlawful. Agents of the Company may be similarly
indemnified, at the discretion of the Board of Directors.
Under Section 145 of the GCL, a similar standard of care is applicable in
the case of derivative actions, except that indemnification only extends to
expenses (including attorneys' fees) incurred in connection with the defense or
settlement of such an action and then, where the person is adjudged to be liable
to the Company, only if and to the extent that the Court of Chancery of the
State of Delaware or the court in which such action was brought determines that
such person is fairly and reasonably entitled to such indemnity and only for
such expenses as the court shall deem proper.
Pursuant to Company's By-Laws, a person eligible for indemnification may
have the expenses incurred in connection with any matter described above paid in
advance of a final disposition by the Company. However, such advances will only
be made upon the delivery of an undertaking by or on behalf of the indemnified
person to repay all amounts so advanced if it is ultimately determined that such
person is not entitled to indemnification.
In addition, under the Company's By-Laws, the Company may purchase and
maintain insurance on behalf of any person who is or was a director, officer,
employee or agent of the Company or of another corporation against any liability
asserted against and incurred by such person in such capacity, or arising out of
the person's status as such whether or not the Company would have the power or
the obligation to indemnify such person against such liability under the
provisions of the Company's By-Laws.
II-1
<PAGE>
INDEMNIFICATION OF DIRECTORS AND OFFICERS OF THE TRUST
The Declaration provides that no Trustee, affiliate of any Trustee, paying
agent, or conversion agent, or any officer, director, shareholder, member,
partner, employee, representative or agent of any Trustee, paying agent, or
conversion agent (each an "Indemnified Person") shall be liable, responsible, or
accountable in damages or otherwise to the Trust or any (i) officer, director,
shareholder, partner, representative, employee or agent of the Trust or its
Affiliates, (ii) any officer, director, shareholder, employees, representatives
or agents of the Company and its affiliates or (iii) the holders from to time of
Trust's Common Securities and Preferred Securities (the persons referred to in
(i)-(iii) collectively, the "Covered Persons") for any loss, damage, or claim
incurred by reason of any act or omission performed or omitted by such
Indemnified Person in good faith on behalf of the Trust and in a manner such
Indemnified Person reasonably believed to be within the scope of authority
conferred on such Indemnified Person by the Declaration or by law, except that
an Indemnified Person shall be liable for any such loss, damage, or claim
incurred by reason of such Indemnified Person's gross negligence (but, in the
case of the Property Trustee, subject to the Trust Indenture Act) or willful
misconduct with respect to such acts or omissions.
The Declaration also provides that, to the full extent permitted by law,
the Company shall indemnify and hold harmless each Indemnified Person from and
against, any loss, damage or claim incurred by such Indemnified Person by reason
of any act or omission performed or omitted by such Indemnified Person in good
faith on behalf of the Trust and in a manner such Indemnified Person reasonably
believed to be within the scope of authority conferred on such Indemnified
Person by the Declaration, except that no Indemnified Person shall be entitled
to be indemnified in respect of any loss, damage or claim incurred by such
Indemnified Person by reason of gross negligence (but, in the case of the
Property Trustee, subject to the Trust Indenture Act) or willful misconduct with
respect to such acts or omissions.
The Declaration further provides that, to the full extent permitted by law,
expenses (including legal fees) incurred by an Indemnified Person in defending
any claim, demand, action, suit or proceeding shall, from time to time, be
advanced by the Company prior to the final disposition of such claim, demand,
action, suit or proceeding upon receipt by the Company of an undertaking by or
on behalf of the Indemnified Person to repay such amount if it shall be
determined that the Indemnified Person is not entitled to be indemnified as
authorized by the Declaration.
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBITS DESCRIPTION OF EXHIBIT
- ---------- ------------------------------------------------------------------------------------------
<S> <C>
4.1 Junior Subordinated Debt Trust Securities Indenture dated as of
March 1, 1997 between the Company and The First National Bank of
Chicago
4.1.1 Second Supplemental Indenture dated as of October 29, 1997 between
the Company and The First National Bank of Chicago
4.2 Registration Rights Agreement dated as of October 29, 1997 between
The AES Corporation and J.P. Morgan Securities Inc., Donaldson,
Lufkin & Jenrette Securities Corporation and Unterberg Harris, L.P.
4.3 Amended and Restated Declaration of Trust of AES Trust II
4.4 Restated Certificate of Trust of AES Trust II (included in Exhibit
4.2)
4.5 Form of Preferred Security (included in Exhibit 4.3)
4.6 Form of Junior Subordinated Debt Trust Security (included in
Exhibit 4.1.1)
4.7 Preferred Securities Guarantee with respect to Preferred Securities
5.1 Opinion of Davis Polk & Wardwell
5.2 Opinion of Delaware counsel
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBITS DESCRIPTION OF EXHIBIT
- ---------- ----------------------------------------------------------------------------------------------
<S> <C>
12.1 Statement re: Computation of ratio of earnings to fixed charges
(incorporated by reference to Amendment No. 1 to Registration
Statement No. 333-39857 of The AES Corporation filed November 19,
1997)
23.1 Consent of Deloitte & Touche LLP
23.2 Consent of Price Waterhouse Auditores Independentes
23.3 Consent of Ernst & Young Auditores Independentes S.C.
23.4 Consent of Davis Polk & Wardwell (included in Exhibit 5.1)
23.5 Consent of Delaware counsel (included in Exhibit 5.2)
24.1 Powers of Attorney for the Company (included on signature page)
24.2 Powers of Attorney for the Company as sponsor, to sign the
Registration Statement on behalf of AES Trust II (included in
Exhibit 4.3)
25.1 Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The First National Bank of Chicago, as Trustee, with
respect to the Junior Subordinated Debt Trust Securities Indenture
(incorporated by reference to Registration Statement No. 333-15487
of The AES Corporation filed November 4, 1996)
25.2 Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The First National Bank of Chicago, as Trustee, with
respect to the Preferred Securities of AES Trust II (incorporated
by reference to Registration Statement No. 333-15487 of The AES
Corporation filed November 4, 1996)
25.3 Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The First National Bank of Chicago, as Trustee, with
respect to the Preferred Securities Guarantee of the Company with
respect to the Preferred Securities of AES Trust II (incorporated
by reference to Registration Statement No. 333-15487 of The AES
Corporation filed November 4, 1996)
</TABLE>
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made of
the securities registered hereby, a post-effective amendment to this
registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in this
registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
provided, however, that the undertakings set forth in paragraphs (1)(i)
and (1)(ii) above do not apply if the information required to be included
in a post-effective amendment by those paragraphs is contained in periodic
reports filed with or furnished to the Commission by the registrant
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act") that are incorporated by reference
in this registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
II-3
<PAGE>
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions described under Item 15 above,
or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Securities Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the registrar of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that is has reasonable grounds to believe that it meets all of the
requirements for filing on Forms S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Arlington, State of Virginia on February 12, 1998.
THE AES CORPORATION
By: /s/ Dennis W. Bakke
------------------------------------
Dennis W. Bakke
President and Chief Executive Officer
The Registrant and each person whose signature appears below constitutes
and appoints Dennis W. Bakke and William R. Luraschi and any agent for service
named in this Registration Statement and each of them, his, her or its true and
lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him, her or it and in his, her, or its name, place and
stead, in any and all capacities, to sign and file any and all amendments
(including post-effective amendments) to this Registration Statement to sign any
related registration statement filed pursuant to Rule 462(b) under the
Securities Act of 1933, and to file the same with all exhibits thereto, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and about the premises,
as fully to all intents and purposes as he, she, or it might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their or his substitutes or substitutes, may lawfully
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated on January 28, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ ---------------------------------------- ------------------
<S> <C> <C>
/s/ Roger W. Sant Chairman of the Board January 28, 1998
- -----------------------
Roger W. Sant
/s/ Dennis W. Bakke President, Chief Executive Officer and January 28, 1998
- ----------------------- Director (Principal Executive Officer)
Dennis W. Bakke
/s/ Vicki-Ann Assevero Director January 28, 1998
- -----------------------
Vicki-Ann Assevero
/s/ Dr. Alice F. Emerson Director January 28, 1998
- -----------------------
Dr. Alice F. Emerson
/s/ Robert F. Hemphill, Jr. Director January 28, 1998
- -----------------------
Robert F. Hemphill, Jr.
/s/ Frank Jungers Director January 28, 1998
- -----------------------
Frank Jungers
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ ---------------------------------------- ------------------
<S> <C> <C>
/s/ Dr. Henry R. Linden Director January 28, 1998
- ----------------------------
Dr. Henry R. Linden
/s/ John H. McArthur Director January 28, 1998
- ----------------------------
John H. McArthur
/s/ Hazel O'Leary Director January 28, 1998
- ----------------------------
Hazel O'Leary
/s/ Thomas I. Unterberg Director January 28, 1998
- ----------------------------
Thomas I. Unterberg
/s/ Robert H. Waterman, Jr. Director January 28, 1998
- ----------------------------
Robert H. Waterman, Jr.
/s/ Barry J. Sharp Vice President and Chief Financial Officer January 28, 1998
- ---------------------------- (Principal Financial and Accounting
Officer)
Barry J. Sharp
By: /s/ William R. Luraschi January 28, 1998
-------------------------
Attorney-in-Fact
</TABLE>
II-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, AES Trust II
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Forms S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Arlington, State of Virginia on February 12, 1998.
AES TRUST II
By: The AES Corporation, as Sponsor
By: /s/ William R. Luraschi
------------------------------------
Name: William R. Luraschi
Title: General Counsel and Secretary
II-7
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIAL
NUMBERED
EXHIBITS DESCRIPTION OF EXHIBITS PAGE
- ---------- ---------------------------------------------------------------------------------- -----------
<S> <C> <C>
4.1 Junior Subordinated Debt Trust Securities Indenture dated as of
March 1, 1997 between the Company and The First National Bank of
Chicago
4.1.1 Second Supplemental Indenture dated as of October 29, 1997 between
the Company and The First National Bank of Chicago
4.2 Registration Rights Agreement dated as of October 29, 1997 between
The AES Corporation and J.P. Morgan Securities Inc., Donaldson,
Lufkin & Jenrette Securities Corporation and Unterberg Harris, L.P
4.3 Amended and Restated Declaration of Trust of AES Trust II
4.4 Restated Certificate of Trust of AES Trust II (included in Exhibit
4.3)
4.5 Form of Preferred Security (included in Exhibit 4.3)
4.6 Form of Junior Subordinated Debt Trust Security (included in
Exhibit 4.1.1)
4.7 Preferred Securities Guarantee with respect to Preferred Securities
5.1 Opinion of Davis Polk & Wardwell*
5.2 Opinion of Delaware counsel*
12.1 Statement re: Computation of ratio of earnings to fixed charges
(incorporated by reference to Amendment No. 1 to Registration
Statement No. 333-39857 of The AES Corporation filed November 19,
1997)
23.1 Consent of Deloitte & Touche LLP
23.2 Consent of Price Waterhouse Auditores Independentes
23.3 Consent of Ernst & Young Auditores Independentes S.C.
23.4 Consent of Davis Polk & Wardwell (included in Exhibit 5.1)
23.5 Consent of Delaware counsel (included in Exhibit 5.2)
24.1 Powers of Attorney for the Company (included on signature page)
24.2 Powers of Attorney for the Company as sponsor, to sign the
Registration State ment on behalf of AES Trust II (included in
Exhibit 4.3)
25.1 Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The First National Bank of Chicago, as Trustee, with
respect to the Junior Subordinated Debt Trust Securities Indenture
(incorporated by reference to Registration Statement No. 333-15487
of The AES Corporation filed November 4, 1996)
25.2 Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The First National Bank of Chicago, as Trustee, with
respect to the Preferred Securities of AES Trust II (incorporated
by reference to Registration Statement No. 333-15487 of The AES
Corporation filed November 4, 1996)
25.3 Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The First National Bank of Chicago, as Trustee, with
respect to the Preferred Securities Guarantee of the Company with
respect to the Preferred Securities of AES Trust II (incorporated
by reference to Registration Statement No. 333-15487 of The AES
Corporation filed November 4, 1996)
</TABLE>
- ----------
*To be filed by amendment
================================================================================
THE AES CORPORATION
AND
THE FIRST NATIONAL BANK OF CHICAGO
AS TRUSTEE
--------------------------------------
JUNIOR SUBORDINATED INDENTURE
DATED AS OF MARCH 1, 1997
--------------------------------------
JUNIOR SUBORDINATED DEBENTURES
================================================================================
<PAGE>
TABLE OF CONTENTS
--------------
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE 1
- ---------
DEFINITIONS
-----------
SECTION 1.01. Definitions.................................................................2
ARTICLE 2
- ---------
ISSUE, DESCRIPTION, TERMS, EXECUTION REGISTRATION AND EXCHANGE OF DEBENTURES
----------------------------------------------------------------------------
SECTION 2.01. Designation, Terms, Amount, Authentication and Delivery of
Debentures..............................................................................8
SECTION 2.02. Form of Debenture and Trustee's Certificate................................10
SECTION 2.03. Date and Denominations of Debentures and Provisions for Payment
of Principal, Premium and Interest.....................................................10
SECTION 2.04. Execution of Debentures....................................................12
SECTION 2.05. Exchange of Debentures.....................................................13
SECTION 2.06. Temporary Debentures.......................................................14
SECTION 2.07. Mutilated, Destroyed, Lost or Stolen Debentures............................15
SECTION 2.08. Cancellation of Surrendered Debentures.....................................16
SECTION 2.09. Provisions of Indenture and Debentures for Sole Benefit of Parties
and Debentureholders...................................................................16
SECTION 2.10. Appointment of Authenticating Agent........................................16
SECTION 2.11. Global Debenture...........................................................17
SECTION 2.12. CUSIP Numbers..............................................................18
ARTICLE 3
- ---------
REDEMPTION OF DEBENTURES AND SINKING FUND PROVISIONS
----------------------------------------------------
SECTION 3.01. Redemption of Debentures...................................................18
SECTION 3.02. Notice of Redemption.......................................................18
SECTION 3.03. Debentures Due and Payable.................................................19
SECTION 3.04. Sinking Funds for Debentures...............................................20
SECTION 3.05. Satisfaction of Sinking Fund Payments With Debentures......................20
SECTION 3.06. Redemption of Debentures for Sinking Fund..................................20
ARTICLE 4
- ---------
PARTICULAR COVENANTS OF THE COMPANY
-------------------------------------
SECTION 4.01. Payment of Principal of (And Premium, if any) and Interest on
Debentures.............................................................................21
SECTION 4.02. Maintenance of Office or Agent for Payment of Debentures,
Designation of Office or Agency for Payment, Registration, Transfer and
Exchange of Debentures.................................................................21
i
<PAGE>
PAGE
----
SECTION 4.03. Duties of Paying Agent; Company as Payment Agent; and Holding
Sums of Trust..........................................................................21
SECTION 4.04. Appointment to Fill Vacancy in Office of Trustee...........................22
ARTICLE 5
- ---------
DEBENTUREHOLDER'S LISTS AND REPORTS BY THE COMPANY AND THE TRUSTEE
------------------------------------------------------------------
SECTION 5.01. Company to Furnish Trustee Information as to Names and Addresses
of Debentures..........................................................................23
SECTION 5.02. Trustee to Preserve Information as to Names and Addresses of
Debentureholders.......................................................................23
SECTION 5.03. Annual and Other Reports to Be Filed by Company With Trustee...............24
SECTION 5.04. Trustee to Transmit Annual Report to Debentureholders......................25
ARTICLE 6
- ---------
REMEDIES OF THE TRUSTEE AND DEBENTUREHOLDERS ON EVENT OF DEFAULT
----------------------------------------------------------------
SECTION 6.01. Events of Default Defined..................................................27
SECTION 6.02. Covenant of Company to Pay to Trustee Whole Amount Due on
Debentures on Default in Payment of Interest or Principal (and Premiums, if any)
....................................................................................29
SECTION 6.03. Application of Moneys Collected by Trustee.................................31
SECTION 6.04. Limitation on Suits by Holders of Debentures...............................31
SECTION 6.05. Remedies Cumulative; Delay or Omission in Exercise of Rights Not
Waiver of Default......................................................................32
SECTION 6.06. Rights of Holders of Majority in Principal Amount of Debentures to
Direct Trustee and to Waive Defaults...................................................32
SECTION 6.07. Trustee to Give Notice of Defaults Known To It, But May Withhold in
Certain Circumstances..................................................................33
SECTION 6.08. Requirements of an Undertaking to Pay Costs in Certain Suits Under
Indenture or Against Trustee...........................................................34
ARTICLE 7
- ---------
CONCERNING THE TRUSTEE
----------------------
SECTION 7.01. Upon Event of Default Occurring and Continuing, Trustee Shall
Exercise Powers Vested In It, and Use Same Degree of Care and Skill In Their
Exercise, as Prudent Individual Would Use..............................................34
SECTION 7.02. Subject to Provisions of Section 7.01......................................36
SECTION 7.03. Trustee Not Liable for Recitals In Indenture Or In Debentures..............37
SECTION 7.04. Trustee, Paying Agent or Debenture Registrar May Own Debentures............38
SECTION 7.05. Moneys Received by Trustee to Be Held In Trust Without Interest............38
SECTION 7.06. Trustee Entitled to Compensation, Reimbursement and Indemnity..............38
SECTION 7.07. Right of Trustee to Rely on Certificate of Officers of Company Where
No Other Evidence Specifically Prescribed..............................................38
ii
<PAGE>
PAGE
----
SECTION 7.08. Trustee Acquiring Conflicting Interest to Eliminate Conflict or Resign
......................................................................................39
SECTION 7.09. Requirements for Eligibility of Trustee....................................45
SECTION 7.10. Resignation of Trustee and Appointment of Successor........................45
SECTION 7.11. Acceptance by Successor to Trustee.........................................47
SECTION 7.12. Successor to Trustee by Merger, Consolidation or Succession to
Business...............................................................................48
SECTION 7.13. Limitations on Rights of Trustee as a Creditor to Obtain Payment of
Certain Claims Within Four Months Prior to Default or During Default, or to
Realize on Property as such Creditor Thereafter........................................48
ARTICLE 8
- ---------
CONCERNING THE DEBENTURES
-------------------------
SECTION 8.01. Evidence of Action by Debentureholders.....................................52
SECTION 8.02. Proof of Execution of Instruments and of Holding of Debentures.............53
SECTION 8.03. Who May Be Deemed Owners of Debentures.....................................53
SECTION 8.04. Debentures Owned by a Company or Controlled or Controlling
Companies Disregarded for Certain Purposes.............................................54
SECTION 8.05. Instruments Executed by Debentureholders Bind Future Holders...............54
ARTICLE 9
- ---------
SUPPLEMENTAL INDENTURES
-----------------------
SECTION 9.01. Purposes for Which Supplemental Indenture May Be Entered Into
Without Consent of Debentureholders....................................................55
SECTION 9.02. Modification of Indenture with Consent of Debentureholders.................56
SECTION 9.03. Effect of Supplemental Indentures..........................................57
SECTION 9.04. Debentures May Bear Notation of Changes By Supplemental
Indentures.............................................................................57
SECTION 9.05. Opinion of Counsel.........................................................57
ARTICLE 10
- ----------
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
-----------------------------------------
SECTION 10.01. Satisfaction and Discharge of Indenture...................................58
SECTION 10.02. Successor Corporation Substituted.........................................58
SECTION 10.03. Opinion of Counsel........................................................58
ARTICLE 11
- ----------
SATISFACTION AND DISCHARGE OF INDENTURE; UNCLAIMED MONEYS
---------------------------------------------------------
SECTION 11.01. Satisfaction and Discharge of Indentures..................................59
SECTION 11.02. Application of Trustee of Funds Deposited For Payment of
Debentures.............................................................................61
iii
<PAGE>
PAGE
----
SECTION 11.03. Application by Trustee of Funds Deposited For Payment of
Debentures.............................................................................61
SECTION 11.04. Repayment of Moneys Held by Paying Agent..................................61
SECTION 11.05. Repayment of Moneys Paid by Trustee.......................................62
ARTICLE 12
- ----------
IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS
---------------------------------------------------------------
SECTION 12.01. Incorporators, Stockholders, Officers and Directors of Company
Exempt From Individual Liability.......................................................62
ARTICLE 13
- ----------
MISCELLANEOUS PROVISIONS
-------------------------
SECTION 13.01. Successors and Assigns of Company Bound by Indenture......................63
SECTION 13.02. Acts of Board, Committee or Officer of Successor Company Valid............63
SECTION 13.03. Surrender of Powers of Company............................................63
SECTION 13.04. Required Notices or Demands May be Served by Mail.........................63
SECTION 13.05. Indenture and Debentures to Be Construed in Accordance with Laws
of the State of New York...............................................................63
SECTION 13.06. Officer's Certificate and Opinion of Counsel to be Furnished Upon
Application or Demands by Company; Statements To Be Included In Each
Certificate or Opinion With Respect to Compliance With Condition or Covenant...........63
SECTION 13.07. Payments Due on Sundays or Holidays.......................................64
SECTION 13.08. Provisions Required by Trust Indenture Act of 1939 to Control.............64
SECTION 13.09. Indenture May Be Executed by its Counterparts.............................64
SECTION 13.10. Separability of Indenture Provisions......................................64
SECTION 13.11. Assignment by Company to Subsidiary.......................................65
SECTION 13.12. Holders of Preferred Securities as Third Party Beneficiaries of the
Indenture; Holders of Preferred Securities May Institute Legal Proceedings
Against the Company in Certain Cases...................................................65
ARTICLE 14
SUBORDINATION OF DEBENTURES
SECTION 14.01. Agreement to Subordinate..................................................66
SECTION 14.02. Payments to Debentureholders..............................................66
SECTION 14.03. Subrogation of Debentures.................................................68
SECTION 14.04. Authorization by Debentureholders.........................................69
SECTION 14.05. Notice to Trustee.........................................................69
SECTION 14.06. Trustee's Relation to Senior and Subordinated Debt........................70
SECTION 14.07. No Impairment to Subordination............................................70
</TABLE>
iv
<PAGE>
THIS INDENTURE, is dated as of the first day of March, 1997, between
The AES Corporation, a corporation duly organized and existing under the laws of
the State of Delaware (hereinafter sometimes referred to as the "Company"), and
The First National Bank of Chicago, as Trustee (hereinafter sometimes referred
to as the "Trustee"):
WHEREAS, for its lawful corporate purposes, the Company has fully
authorized the execution and delivery of this Indenture to provide for the
issuance of unsecured debentures (hereinafter referred to as the "Debentures"),
in an unlimited aggregate principal amount to be issued from time to time in one
or more series in accordance with the terms of this Indenture, as registered
Debentures without coupons, to be authenticated by the certificate of the
Trustee;
WHEREAS, to provide the terms and conditions upon which the Debentures
are to be authenticated, issued and delivered, the Company has duly authorized
the execution of this Indenture;
WHEREAS, the Debentures and the certificate of authentication to be
borne by the Debentures (the "Certificate of Authentication") are to be
substantially in such forms as may be approved by the Board of Directors (as
defined below) or set forth in any indenture supplemental to this Indenture;
AND WHEREAS, all acts and things necessary to make the Debentures
issued pursuant hereto, when executed by the Company and authenticated and
delivered by the Trustee in accordance with the terms of this Indenture, the
valid, binding and legal obligations of the Company, and to constitute a valid
indenture and agreement according to its terms, have been done and performed or
will be done and performed prior to the issuance of such Debentures, and the
execution of this Indenture has been and the issuance hereunder of the
Debentures has been or will be prior to issuance in all respects duly
authorized, and the Company, in the exercise of the legal right and power in it
vested, executes this Indenture and proposes to make, execute, issue and deliver
the Debentures;
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
That in order to declare the terms and conditions upon which the
Debentures are and are to be authenticated, issued and delivered, and in
consideration of the premises and of the acquisition and acceptance of the
Debentures by the holders thereof, the Company covenants and agrees with the
Trustee, for the equal and proportionate benefit (subject to the provisions of
this Indenture) of the respective holders from time to time of the Debentures,
without any discrimination, preference or priority of any one Debenture over any
other by reason of priority in the time of issue, sale or negotiation thereof,
or otherwise, except as provided herein, as follows:
<PAGE>
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions. The terms defined in this Section (except as
in this Indenture otherwise expressly provided or unless the context otherwise
requires) for all purposes of this Indenture, any resolution of the Board of
Directors of the Company and of any indenture supplemental hereof shall have the
respective meanings specified in this Section. All other terms used in this
Indenture which are defined in the Trust Indenture Act of 1939, as amended, or
which are by reference in such Act defined in the Securities Act of 1933, as
amended (except as herein otherwise expressly provided or unless the context
otherwise requires), shall have the meanings assigned to such terms in said
Trust Indenture Act and in said Securities Act as in force at the date of this
instrument.
"AES Trust" means such statutory business trust created under the laws
of the State of Delaware specified in the applicable Board Resolution or
supplemental indenture establishing a particular series of Debentures pursuant
to Section 2.01 hereof.
"Affiliate" of the Company means any company at least a majority of
whose outstanding voting stock shall at the time be owned by the Company, or by
one or more direct or indirect subsidiaries of the Company or by the Company and
one or more direct or indirect subsidiaries of the Company. For the purposes
only of this definition of the term "Affiliate", the term "voting stock", as
applied to the stock of any company, shall mean stock of any class or classes
having ordinary voting power for the election of a majority of the directors of
such company, other than stock having such power only by reason of the
occurrence of a contingency.
"Authenticating Agent" means an authenticating agent with respect to
all or any of the series of Debentures, as the case may be, appointed with
respect to all or any series of the Debentures, as the case may be, by the
Trustee pursuant to Section 2.10.
"Bank Credit Agreement" means the Credit Agreement dated as of May 20,
1996 among the Company, the Banks named on the signature pages thereof and
Morgan Guaranty Trust Company of New York, as such Agreement has been and may be
amended, restated, supplemented or otherwise modified from time to time, and
includes any agreement extending the maturity of, or restructuring (including,
but not limited to, the inclusion of additional borrowers thereunder that are
Subsidiaries of the Company and whose obligations are guaranteed by the Company
thereunder) all or any portion of, the Debt under such Agreement or any
successor agreements and includes any agreement with one or more banks or other
lending institutions refinancing all or any portion of the Debt under such
Agreement or any successor agreements.
2
<PAGE>
"Board of Directors" means the Board of Directors of the Company, or
any committee of such Board duly authorized to act hereunder.
"Board Resolution" means a copy of one or more resolutions, certified
by the secretary or an assistant secretary of the Company to have been adopted
or consented to by the Board of Directors and to be in full force and effect,
and delivered to the Trustee.
"Business day", with respect to any series of Debentures, means any day
other than a day on which banking institutions in the Borough of Manhattan, the
City and State of New York, are authorized or obligated by law or executive
order to close.
"Certificate" means a certificate signed by the principal executive
officer, the principal financial officer or the principal accounting officer of
the Company. The Certificate need not comply with the provisions of Section
13.06.
"Change of Control" means the occurrence of one or more of the
following events: (i) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all, or substantially all,
of the assets of the Company to any Person or group (as that term is used in
Section 13(d)(3) of the Securities Exchange Act of 1934) of Persons, (ii) a
Person or group (as so defined) of Persons (other than management of the Company
on the date of this Indenture or their Affiliates) shall have become the
beneficial owner of more than 35% of the outstanding voting stock of the
Company, or (iii) during any one-year period, individuals who at the beginning
of such period constitute the Board of Directors (together with any new director
whose election or nomination was approved by a majority of the directors then in
office who were either directors at the beginning of such period or who were
previously so approved) cease to constitute a majority of the Board of
Directors.
"Common Securities" means the common undivided beneficial interests in
the assets of the applicable AES Trust.
"Common Stock" means the common stock of the Company, par value $.01
per share.
"Company" means The AES Corporation, a corporation duly organized and
existing under the laws of the State of Delaware, and, subject to the provisions
of Article Ten, shall also include its successors and assigns.
"Corporate Trust Office" means the office of the Trustee at which at
any particular time its corporate trust business shall be principally
administered, which office at the date of the execution of this Indenture is
located at One First National Plaza, Suite 0126, Chicago, IL 60670-0126,
Attention: Corporate Trust Administration.
3
<PAGE>
"Currency Agreement" means, with respect to any Person, any foreign
exchange contract, currency swap agreement or other similar agreement or
arrangement designed to protect such Person or any of its Subsidiaries against
fluctuations in currency values to or under which such Person or any of its
Subsidiaries is a party or a beneficiary on the date hereof or becomes a party
or a beneficiary thereafter.
"Debt" means, with respect to any Person at any date of determination
(without duplication), (i) all indebtedness of such Person for borrowed money,
(ii) all obligations of such Person evidenced by bonds, debentures, notes or
other similar instruments, (iii) all obligations of such Person in respect of
letters of credit or bankers' acceptance or other similar instruments (or
reimbursement obligations with respect thereto), (iv) all obligations of such
Person to pay the deferred purchase price of property or services, except Trade
Payables, (v) all obligations of such Person as lessee under capitalized leases,
(vi) all Debt of others secured by a Lien on any asset of such Person, whether
or not such Debt is assumed by such Person; provided that, for purposes of
determining the amount of any Debt of the type described in this clause, if
recourse with respect to such Debt is limited to such asset, the amount of such
Debt shall be limited to the lesser of the fair market value of such asset or
the amount of such Debt, (vii) all Debt of others Guaranteed by such Person to
the extent such Debt is Guaranteed by such Person, (viii) all redeemable stock
valued at the greater of its voluntary or involuntary liquidation preference
plus accrued and unpaid dividends and (ix) to the extent not otherwise included
in this definition, all obligations of such Person under Currency Agreements and
Interest Rate Agreements.
"Declaration of Trust" means the Declaration of Trust of the AES Trust,
if any, specified in the applicable Board Resolution or supplemental indenture
establishing a particular series of Debentures pursuant to Section 2.01 hereof.
"Debenture" or "Debentures" means any Debenture or Debentures, as the
case may be, authenticated and delivered under this Indenture.
"Debentureholder", "holder of Debentures", "registered holder", or
other similar term, means the person or persons in whose name or names a
particular Debenture shall be registered on the books of the Company kept for
the purpose in accordance with the terms of this Indenture.
"Default" means any event, act or condition which with notice or lapse
of time, or both, would constitute an Event of Default.
"Depositary" means with respect to Debentures of any series, for which
the Company shall determine that such Debentures will be issued as a Global
Debenture, The Depository Trust Company, New York, New York, another clearing
agency, or any successor registered as a clearing agency under the Securities
Exchange Act of 1934, as
4
<PAGE>
amended (the "Exchange Act"), or other applicable statute or regulation, which,
in each case, shall be designated by the Company pursuant to either Section 2.01
or 2.11.
"Designated Senior and Subordinated Debt" means (i) Debt under the Bank
Credit Agreement and (ii) Debt constituting Senior and Subordinated Debt which,
at the time of its determination, (A) has an aggregate principal amount of at
least $30 million and (B) is specifically designated in the instrument
evidencing such Senior and Subordinated Debt as "Designated Senior and
Subordinated Debt" by the Company.
"Event of Default", with respect to Debentures of a particular series
means any event specified in Section 6.01(a), continued for the period of time,
if any, therein designated.
"Global Debenture" means, with respect to any series of Debentures, a
Debenture executed by the Company and delivered by the Trustee to the Depositary
or pursuant to the Depositary's instruction, all in accordance with the
Indenture, which shall be registered in the name of the Depositary or its
nominee.
"Governmental Obligations" means securities that are (i) direct
obligations of the United States of America for the payment of which its full
faith and credit is pledged or (ii) obligations of a person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America, the payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which, in either case, are
not callable or redeemable at the option of the issuer thereof, and shall also
include a depository receipt issued by a bank (as defined in Section 3(a) (2) of
the Securities Act of 1933, as amended) as custodian with respect to any such
Governmental Obligation or a specific payment of principal of or interest on any
such Governmental Obligation held by such custodian for the account of the
holder of such depository receipt; provided that (except as required by law)
such custodian is not authorized to make any deduction from the amount payable
to the holder of such depository receipt from any amount received by the
custodian in respect of the Governmental Obligation or the specific payment of
principal of or interest on the Governmental Obligation evidenced by such
depository receipt.
"Guarantee" means any obligation, contingent or otherwise, of any
Person directly or indirectly guaranteeing any Debt or other obligation of any
other Person and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such Person (i) to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Debt or other obligation of such other Person (whether arising by virtue of
partnership arrangements, or by agreement to keep well, to purchase assets,
goods, securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise) or (ii) entered into for purposes of assuring
in any other manner the obligee of such Debt or other obligation of the payment
thereof or to protect such
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obligee against loss in respect thereof (in whole or in part); provided that the
term "Guarantee" shall not include endorsements for collection or deposit in the
ordinary course of business. The term "Guarantee" used as a verb has a
corresponding meaning.
"Guarantee Agreement" means the guarantee, if any, that the Company may
enter into that operates directly or indirectly for the benefit of holders of
Preferred Securities issued by a AES Trust.
"Indenture" means this instrument as originally executed, or, if
amended or supplemented as herein provided, as so amended or supplemented.
"Interest Payment Date" when used with respect to any installment of
interest on a Debenture of a particular series means the date specified in such
Debenture or in a Board Resolution or in an indenture supplemental hereto with
respect to such series as the fixed date on which an installment of interest
with respect to Debentures of that series is due and payable.
"Interest Rate Agreement" means, with respect to any Person, any
interest rate protection agreement, interest rate future agreement, interest
rate option agreement, interest rate swap agreement, interest rate cap
agreement, interest rate collar agreement, interest rate hedge agreement or
other similar agreement or arrangement designed to protect such Person or any of
its Subsidiaries against fluctuations in interest rates to or under which such
Person or any of its Subsidiaries is a party or a beneficiary on the date hereof
or becomes a party or a beneficiary thereafter.
"Lien" means, with respect to any Property, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such
Property. For purposes of this Indenture, the Company shall be deemed to own
subject to a Lien any Property which it has acquired or holds subject to the
interest of a vendor or lessor under any conditional sale agreement, capital
lease or other title retention agreement relating to such Property.
"Officers' Certificate" means a certificate signed by the President or
a Vice President and by the Treasurer or an Assistant Treasurer or the
Controller or an Assistant Controller or the Secretary or an Assistant Secretary
of the Company and who shall be satisfactory to the Trustee. Each such
certificate shall include the statements provided for in Section 13.06, if and
to the extent required by the provisions thereof.
"Opinion of Counsel" means an opinion in writing signed by legal
counsel, who may be an employee of or counsel for the Company and who shall be
satisfactory to the Trustee. Each such opinion shall include the statements
provided for in section 13.06, if and to the extent required by the provisions
thereof.
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"Outstanding", when used with reference to Debentures of any series,
subject to the provisions of Section 8.01, means, as of any particular time, all
Debentures of that series theretofore authenticated and delivered by the Trustee
under this Indenture, except (a) Debentures theretofore canceled by the Trustee
or any paying agent, or delivered to the Trustee or any paying agent for
cancellation or which have previously been canceled; (b) Debentures or portions
thereof for the payment or redemption of which moneys or Governmental
Obligations in the necessary amount shall have been deposited in trust with the
Trustee or with any paying agent (other than the Company) or shall have been set
aside and segregated in trust for the holders of such Debentures by the Company
(if the Company shall act as its own paying agent); provided, however, that if
such Debentures or portions of such Debentures are to be redeemed prior to the
maturity thereof, notice of such redemption shall have been given as in Article
Three provided, or provision satisfactory to the Trustee shall have been made
for giving such notice; and (c) Debentures in lieu of or in substitution for
which other Debentures shall have been authenticated and delivered pursuant to
the terms of Section 2.07.
"Person" means any individual, corporation, joint venture, association,
joint stock company, trust, unincorporated organization or government or any
agency or political subdivision thereof.
"Predecessor Debenture" of any particular Debenture means every
previous Debenture evidencing all or a portion of the same debt as that
evidenced by such particular Debenture; and, for the purposes of this
definition, any Debenture authenticated and delivered under Section 2.07 in lieu
of a lost, destroyed or stolen Debenture shall be deemed to evidence the same
debt as the lost, destroyed or stolen Debenture.
"Preferred Securities" means the preferred undivided beneficial
interests in the assets of the applicable AES Trust.
"Property Trustee" means the entity performing the function of the
Property Trustee under the applicable Declaration of Trust of an AES Trust.
"Responsible Officer" when used with respect to the Trustee means the
chairman of the board of directors, the president, any vice president, the
secretary, the treasurer, any trust officer, any corporate trust officer or any
other officer or assistant officer of the Trustee customarily performing
functions similar to those performed by the persons who at the time shall be
such officers, respectively, or to whom any corporate trust matter is referred
because of his or her knowledge of and familiarity with the particular subject.
"Security Exchange" when used with respect to the Debentures of any
series which are held as trust assets of an AES Trust pursuant to the
Declaration of Trust of such AES Trust, means the distribution of the Debentures
of such series by such AES
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Trust in exchange for the Preferred Securities and Common Securities of such AES
Trust in dissolution of such AES Trust pursuant to the Declaration of Trust of
such AES Trust.
"Senior and Subordinated Debt" means the principal of (and premium, if
any) and interest on all Debt of the Company whether created, incurred or
assumed before, on or after the date of this Indenture; provided that such
Senior and Subordinated Debt shall not include (i) Debt of the Company that,
when incurred and without respect to any election under Section 1111(b) of Title
11, U.S. Code, was without recourse, (ii) any other Debt of the Company which by
the terms of the instrument creating or evidencing the same is specifically
designated as not being senior in right of payment to the Debentures, and in
particular the Debentures shall rank pari passu with all other debt securities
and guarantees issued to any trust, partnership or other entity affiliated with
the Company which is a financing vehicle of the Company in connection with an
issuance of preferred securities by such financing entity and (iii) redeemable
stock of the Company.
"Subsidiary" means any corporation at least a majority of whose
outstanding voting stock shall at the time be owned by the Company or by one or
more subsidiaries or by the Company and one or more Subsidiaries. For the
purposes only of this definition of the term "Subsidiary", the term "voting
stock", as applied to the stock of any corporation, shall mean stock of any
class or classes having ordinary voting power for the election of a majority of
the directors of such corporation, other than stock having such power only by
reason of the occurrence of a contingency.
"Trade Payables" means, with respect to any Person, any accounts
payable or any other indebtedness or monetary obligation to trade creditors
created, assumed or Guaranteed by such Person or any of its Subsidiaries arising
in the ordinary course of business in connection with the acquisition of goods
or services.
"Trustee" means The First National Bank of Chicago, and, subject to the
provisions of Article Seven, shall also include its successors and assigns, and,
if at any time there is more than one person acting in such capacity hereunder,
"Trustee" shall mean each such person. The term "Trustee" as used with respect
to a particular series of the Debentures shall mean the trustee with respect to
that series.
"Trust Indenture Act", subject to the provisions of Section 9.01 and
9.02, means the Trust Indenture Act of 1939, as amended and in effect at the
date of execution of this Indenture.
"Trust Securities" means the Common Securities and the Preferred
Securities of the applicable AES Trust.
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ARTICLE 2
ISSUE, DESCRIPTION, TERMS, EXECUTION REGISTRATION AND EXCHANGE OF
DEBENTURES
SECTION 2.01. Designation, Terms, Amount, Authentication and Delivery
of Debentures. The aggregate principal amount of Debentures which may be
authenticated and delivered under this Indenture is unlimited.
The Debentures may be issued in one or more series up to the aggregate
principal amount of Debentures of that series from time to time authorized by or
pursuant to a Board Resolution or pursuant to one or more indentures
supplemental hereto, prior to the initial issuance of Debentures of a particular
series. Prior to the initial issuance of Debentures of any series, there shall
be established in or pursuant to a Board Resolution, and set forth in an
Officers' Certificate, or established in one or more indentures supplemental
hereto:
(1) the title of the Debentures of the series (which shall
distinguish the Debentures of the series from all other
Debentures);
(2) any limit upon the aggregate principal amount of the
Debentures of that series which may be authenticated and
delivered under this Indenture (except for Debentures
authenticated and delivered upon registration of transfer of, or
in exchange for, or in lieu of, other Debentures of that series):
(3) the date or dates on which the principal of the Debentures of
the series is payable;
(4) the rate or rates at which the Debentures of the series shall
bear interest or the manner of calculation of such rate or rates,
if any;
(5) the date or dates from which such interest shall accrue, the
Interest Payment Dates on which such interest will be payable or
the manner of determination of such Interest Payment Dates and
the record date for the determination of holders to whom interest
is payable on any such Interest Payment Dates;
(6) the right, if any, to extend or defer the interest payment
periods and the duration of such extension;
(7) the period or periods within which, the price or prices at
which, and the terms and conditions upon which, Debentures of the
series may be redeemed, in whole or in part, at the option of the
Company;
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(8) the obligation, if any, of the Company to redeem or purchase
Debentures of the series pursuant to any sinking fund or
analogous provisions (including payments made in cash in
anticipation of future sinking fund obligations) or at the option
of a holder thereof and the period or periods within which, the
price or prices at which, and the terms and conditions upon
which, Debentures of the series shall be redeemed or purchased,
in whole or in part, pursuant to such obligation;
(9) any exchangeability, conversion or prepayment provisions of
the Debentures;
(10) the form of the Debentures of the series including the form
of the Certificate of Authentication for such series;
(11) if other than denominations of $50 or any integral multiple
thereof, the denominations in which the Debentures of the series
shall be issuable;
(12) any and all other terms with respect to such series (which
terms shall not be inconsistent with the terms of this
Indenture); and
(13) whether the Debentures are issuable as a Global Debenture
and, in such case, the identity of the Depositary for such
series.
(14) If the Debentures of such series are to be deposited as
trust assets in a AES Trust the name of the applicable AES Trust
(which shall distinguish such statutory business trust from all
other AES Trusts) into which the Debentures of such series are to
be deposited as trust assets and the date of its Declaration of
Trust.
All Debentures of any one series shall be substantially identical
except as to denomination and except as may otherwise be provided in or pursuant
to any such Board Resolution or in any indenture supplemental hereto.
If any of the terms of the series are established by action taken
pursuant to a Board Resolution, a copy of an appropriate record of such action
shall be certified by the Secretary or an Assistant Secretary of the Company and
delivered to the Trustee at or prior to the delivery of the Officers'
Certificate setting forth the terms of the series.
SECTION 2.02. Form of Debenture and Trustee's Certificate. The
Debentures of any series and the Trustee's certificate of authentication to be
borne by such Debentures shall be substantially of the tenor and purport as set
forth in one or more indentures supplemental hereto or as provided in a Board
Resolution and as set forth in an Officers' Certificate, and may have such
letters, numbers or other marks of identification or
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designation and such legends or endorsements printed, lithographed or engraved
thereon as the Company may deem appropriate and as are not inconsistent with the
provisions of this Indenture, or as may be required to comply with any law or
with any rule or regulation made pursuant thereto or with any rule or regulation
of any stock exchange on which Debentures of that series may be listed, or to
conform to usage.
SECTION 2.03. Date and Denominations of Debentures and Provisions for
Payment of Principal, Premium and Interest. The Debentures shall be issuable as
registered Debentures and in the denominations of $50 or any integral multiple
thereof, subject to Section 2.01(10). The Debentures of a particular series
shall bear interest payable on the dates and at the rate specified with respect
to that series. The principal of and the interest on the Debentures of any
series, as well as any premium thereon in case of redemption thereof prior to
maturity, shall be payable in the coin or currency of the United States of
America which at the time is legal tender for public and private debt, at the
office or agency of the Company maintained for that purpose in the Borough of
Manhattan, The City and State of New York. Each Debenture shall be dated the
date of its authentication. Interest on the Debentures shall be computed on the
basis of a 360-day year composed of twelve 30-day months.
The interest installment on any Debenture which is payable, and is
punctually paid or duly provided for, on any Interest Payment Date for
Debentures of that series shall be paid to the person in whose name said
Debenture (or one or more Predecessor Debentures) is registered at the close of
business on the regular record date for such interest installment. In the event
that any Debenture of a particular series or portion thereof is called for
redemption and the redemption date is subsequent to a regular record date with
respect to any Interest Payment Date and prior to such Interest Payment Date,
interest on such Debenture will be paid upon presentation and surrender of such
Debenture as provided in Section 3.03.
Any interest on any Debenture which is payable, but is not punctually
paid or duly provided for, on any Interest Payment Date for Debentures of the
same series (herein called "Defaulted Interest") shall forthwith cease to be
payable to the registered holder on the relevant regular record date by virtue
of having been such holder; and such Defaulted Interest shall be paid by the
Company, at its election, as provided in clause (1) or clause (2) below:
(1) The Company may make payment of any Defaulted Interest on
Debentures to the persons in whose names such Debentures (or
their respective Predecessor Debentures) are registered at the
close of business on a special record date for the payment of
such Defaulted Interest, which shall be fixed in the following
manner: the Company shall notify the Trustee in writing of the
amount of Defaulted Interest proposed to be paid on each such
Debenture and the date of the proposed payment, and at the
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same time the Company shall deposit with the Trustee an amount of
money equal to the aggregate amount proposed to be paid in
respect of such Defaulted Interest or shall make arrangements
satisfactory to the Trustee for such deposit prior to the date of
the proposed payment, such money when deposited to be held in
trust for the benefit of the persons entitled to such Defaulted
Interest as in this clause provided. Thereupon the Trustee shall
fix a special record date for the payment of such Defaulted
Interest which shall not be more than 15 nor less than 10 days
prior to the date of the proposed payment and not less than 10
days after the receipt by the Trustee of the notice of the
proposed payment. The Trustee shall promptly notify the Company
of such special record date and, in the name and at the expense
of the Company, shall cause notice of the proposed payment of
such Defaulted Interest and the special record date therefor to
be mailed, first class postage prepaid, to each Debentureholder
at his or her address as it appears in the Debenture Register (as
hereinafter defined), not less than 10 days prior to such special
record date. Notice of the proposed payment of such Defaulted
Interest and the special record date therefor having been mailed
as aforesaid, such Defaulted Interest shall be paid to the
persons in whose names such Debentures (or their Predecessor
Debentures) are registered on such special record date and shall
be no longer payable pursuant to the following clause (2).
(2) The Company may make payment of any Defaulted Interest on any
Debentures in any other lawful manner not inconsistent with the
requirements of any securities exchange on which such Debentures
may be listed, and upon such notice as may be required by such
exchange, if, after notice given by the Company to the Trustee of
the proposed payment pursuant to this clause, such manner of
payment shall be deemed practicable by the Trustee.
Unless otherwise set forth in a Board Resolution or one or more
indentures supplemental hereto establishing the terms of any series of
Debentures pursuant to Section 2.01 hereof, the term "regular record date" as
used in this Section with respect to a series of Debentures with respect to any
Interest Payment Date for such series shall mean either the fifteenth day of the
month immediately preceding the month in which an Interest Payment Date
established for such series pursuant to Section 2.01 hereof shall occur, if such
Interest Payment Date is the first day of a month, or the last day of the month
immediately preceding the month in which an Interest Payment Date established
for such series pursuant to Section 2.01 hereof shall occur, if such Interest
Payment Date is the fifteenth day of a month, whether or not such date is
business day.
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Subject to the foregoing provisions of this Section, each Debenture of
a series delivered under this Indenture upon transfer of or in exchange for or
in lieu of any other Debenture of such series shall carry the rights to interest
accrued and unpaid, and to accrue, which were carried by such other Debenture.
SECTION 2.04. Execution of Debentures. The Debentures shall, subject to
the provisions of Section 2.06, be printed on steel engraved borders or fully or
partially engraved, or legibly typed, as the proper officers of the Company may
determine, and shall be signed on behalf of the Company by the Chairman or Vice
Chairman of its Board of Directors or its President or one of its Vice
Presidents, under its corporate seal attested by its Secretary or one of its
Assistant Secretaries. The signature of the Chairman, Vice Chairman, President
or a Vice President and/or the signature of the Secretary or an Assistant
Secretary in attestation of the corporate seal, upon the Debentures, may be in
the form of a manual or facsimile signature of a present or any future Chairman,
Vice Chairman, President or Vice President and of a present or any future
Secretary or Assistant Secretary and may be imprinted or otherwise reproduced on
the Debentures and for that purpose the Company may use the manual or facsimile
signature of any person who shall have been a Chairman, Vice Chairman, President
or Vice President, or of any person who shall have been a Secretary or Assistant
Secretary, notwithstanding the fact that at the time the Debentures shall be
authenticated and delivered or disposed of such person shall have ceased to be
the Chairman, Vice Chairman, President or a Vice President, or the Secretary or
an Assistant Secretary, of the Company, as the case may be. The seal of the
Company may be in the form of a facsimile of the seal of the Company and may be
impressed, affixed, imprinted or otherwise reproduced on the Debentures.
Only such Debentures as shall bear thereon a Certificate of
Authentication substantially in the form established for such Debentures,
executed manually by an authorized signatory of the Trustee, or by any
Authenticating Agent with respect to such Debentures, shall be entitled to the
benefits of this Indenture or be valid or obligatory for any purpose. Such
certificate executed by the Trustee, or by any Authenticating Agent appointed by
the Trustee with respect to such Debentures, upon any Debenture executed by the
Company shall be conclusive evidence that the Debenture so authenticated has
been duly authenticated and made available for delivery hereunder and that the
holder is entitled to the benefits of this Indenture.
At any time and from time to time after the execution and delivery of
this Indenture, the Company may deliver Debentures of any series executed by the
Company to the Trustee for authentication, together with a written order of the
Company for the authentication and delivery of such Debentures, signed by its
President or any Vice President and its Treasurer or any Assistant Treasurer,
and the Trustee in accordance with such written order shall authenticate and
make available for delivery such Debentures.
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In authenticating such Debentures and accepting the additional
responsibilities under this Indenture in relation to such Debentures, the
Trustee shall be entitled to receive, and (subject to Section 7.01) shall be
fully protected in relying upon, an Opinion of Counsel stating that the form and
terms thereof have been established in conformity with the provisions of this
Indenture.
The Trustee shall not be required to authenticate such Debentures if
the issue of such Debentures pursuant to this Indenture will affect the
Trustee's own rights, duties or immunities under the Debentures and this
Indenture or otherwise in a manner which is not reasonably acceptable to the
Trustee.
SECTION 2.05. Exchange of Debentures. (a) Debentures of any series may
be exchanged upon presentation thereof at the office or agency of the Company
designated for such purpose in the Borough of Manhattan, The City and State of
New York, for other Debentures of such series of authorized denominations, and
for a like aggregate principal amount, upon payment of a sum sufficient to cover
any tax or other governmental charge in relation thereto, all as provided in
this Section. In respect of any Debentures so surrendered for exchange, the
Company shall execute, the Trustee shall authenticate and such office or agency
shall make available for delivery in exchange therefor the Debenture or
Debentures of the same series which the Debentureholder making the exchange
shall be entitled to receive, bearing numbers not contemporaneously outstanding.
(b) The Company shall keep, or cause to be kept, at its office or
agency designated for such purpose in the Borough of Manhattan, The City and
State of New York, or such other location designated by the Company a register
or registers (herein referred to as the "Debenture Register") in which, subject
to such reasonable regulations as it may prescribe, the Company shall register
the Debentures and the transfers of Debentures as in this Article provided and
which at all reasonable times shall be open for inspection by the Trustee. The
registrar for the purpose of registering Debentures and transfer of Debentures
as herein provided shall be appointed as authorized by Board Resolution (the
"Debenture Registrar").
Upon surrender for transfer of any Debenture at the office or agency of
the Company designated for such purpose in the Borough of Manhattan, The City
and State of New York, the Company shall execute, the Trustee shall authenticate
and such office or agency shall make available for delivery in the name of the
transferee or transferees a new Debenture or Debentures of the same series as
the Debenture presented for a like aggregate principal amount.
All Debentures presented or surrendered for exchange or registration of
transfer, as provided in this Section, shall be accompanied (if so required by
the Company or the Debenture Registrar) by a written instrument or instruments
of transfer, in form
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satisfactory to the Company or the Debenture Registrar, duly executed by the
registered holder or by his duly authorized attorney in writing.
(c) No service charge shall be made for any exchange or registration of
transfer of Debentures, or issue of new Debentures in case of partial redemption
of any series, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge in relation thereto, other than exchanges
pursuant to Section 2.06, the second paragraph of Section 3.03 and Section 9.04
not involving any transfer.
(d) The Company shall not be required (i) to issue, exchange or
register the transfer of any Debentures during a period beginning at the opening
of business 15 days before the day of the mailing of a notice of redemption of
less than all the outstanding Debentures of the same series and ending at the
close of business on the day of such mailing, nor (ii) to register the transfer
of or exchange any Debentures of any series or portions thereof called for
redemption. The provisions of this Section 2.05 are, with respect to any Global
Debenture, subject to Section 2.11 hereof.
SECTION 2.06. Temporary Debentures. Pending the preparation of
definitive Debentures of any series, the Company may execute, and the Trustee
shall authenticate and make available for delivery, temporary Debentures
(printed, lithographed or typewritten) of any authorized denomination, and
substantially in the form of the definitive Debentures in lieu of which they are
issued, but with such omissions, insertions and variations as may be appropriate
for temporary Debentures, all as may be determined by the Company. Every
temporary Debenture of any series shall be executed by the Company and be
authenticated by the Trustee upon the same conditions and in substantially the
same manner, and with like effect, as the definitive Debentures of such series.
Without unnecessary delay the Company will execute and will furnish definitive
Debentures of such series and thereupon any or all temporary Debentures of such
series may be surrendered in exchange therefor (without charge to the holders),
at the office or agency of the Company designated for the purpose in the Borough
of Manhattan, The City and State of New York, and the Trustee shall authenticate
and such office or agency shall make available for delivery in exchange for such
temporary Debentures an equal aggregate principal amount of definitive
Debentures of such series, unless the Company advises the Trustee to the effect
that definitive Debentures need not be executed and furnished until further
notice from the Company. Until so exchanged, the temporary Debentures of such
series shall be entitled to the same benefits under this Indenture as definitive
Debentures of such series authenticated and delivered hereunder.
SECTION 2.07. Mutilated, Destroyed, Lost or Stolen Debentures. In case
any temporary or definitive Debenture shall become mutilated or be destroyed,
lost or stolen, the Company (subject to the next succeeding sentence) shall
execute, and upon its request the Trustee (subject as aforesaid) shall
authenticate and make available for delivery, a new Debenture of the same series
bearing a number not contemporaneously outstanding,
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in exchange and substitution for the mutilated Debenture, or in lieu of and in
substitution for the Debenture so destroyed, lost or stolen. In every case the
applicant for a substituted Debenture shall furnish to the Company and to the
Trustee such security or indemnity as may be required by them to save each of
them harmless, and, in every case of destruction, loss or theft, the applicant
shall also furnish to the Company and to the Trustee evidence to their
satisfaction of the destruction, loss or theft of the applicant's Debenture and
of the ownership thereof. The Trustee may authenticate any such substituted
Debenture and make available for delivery the same upon the written request or
authorization of any officer of the Company. Upon the issuance of any
substituted Debenture, the Company may require the payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in relation
thereto and any other expenses (including the fees and expenses of the Trustee)
connected therewith. In case any Debenture which has matured or is about to
mature shall become mutilated or be destroyed, lost or stolen, the Company may,
instead of issuing a substitute Debenture, pay or authorize the payment of the
same (without surrender thereof except in the case of a mutilated Debenture) if
the applicant for such payment shall furnish to the Company and to the Trustee
such security or indemnity as they may require to save them harmless, and, in
case of destruction, loss or theft, evidence to the satisfaction of the Company
and the Trustee of the destruction, loss or theft of such Debenture and of the
ownership thereof.
Every Debenture issued pursuant to the provisions of this Section in
substitution for any Debenture which is mutilated, destroyed, lost or stolen
shall constitute an additional contractual obligation of the Company, whether or
not the mutilated, destroyed, lost or stolen Debenture shall be found at any
time, or be enforceable by anyone, and shall be entitled to all the benefits of
this Indenture equally and proportionately with any and all other Debentures of
the same series duly issued hereunder. All Debentures shall be held and owned
upon the express condition that the foregoing provisions are exclusive with
respect to the replacement or payment of mutilated, destroyed, lost or stolen
Debentures, and shall preclude (to the extent lawful) any and all other rights
or remedies, notwithstanding any law or statute existing or hereafter enacted to
the contrary with respect to the replacement or payment of negotiable
instruments or other securities without their surrender.
SECTION 2.08. Cancellation of Surrendered Debentures. All Debentures
surrendered for the purpose of payment, redemption, exchange or registration of
transfer shall, if surrendered to the Company or any paying agent, be delivered
to the Trustee for cancellation, or, if surrendered to the Trustee, shall be
canceled by it, and no Debentures shall be issued in lieu thereof except as
expressly required or permitted by any of the provisions of this Indenture. On
written request of the Company, the Trustee shall deliver to the Company
canceled Debentures held by the Trustee. If the Company shall otherwise acquire
any of the Debentures, however, such acquisition shall not operate as a
redemption or satisfaction of the indebtedness represented by such Debentures
unless and until the same are delivered to the Trustee for cancellation.
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SECTION 2.09. Provisions of Indenture and Debentures for Sole Benefit
of Parties and Debentureholders. Nothing in this Indenture or in the Debentures,
express or implied, shall give or be construed to give to any person, firm or
corporation, other than the parties hereto and the holders of the Debentures,
any legal or equitable right, remedy or claim under or in respect of this
Indenture, or under any covenant, condition or provision herein contained; all
such covenants, conditions and provisions being for the sole benefit of the
parties hereto and of the holders of the Debentures.
SECTION 2.10. Appointment of Authenticating Agent. So long as any of
the Debentures of any series remain outstanding there may be an Authenticating
Agent for any or all such series of Debentures which the Trustee shall have the
right to appoint. Said Authenticating Agent shall be authorized to act on behalf
of the Trustee to authenticate Debentures of such series issued upon exchange,
transfer or partial redemption thereof, and Debentures so authenticated shall be
entitled to the benefits of this Indenture and shall be valid and obligatory for
all purposes as if authenticated by the Trustee hereunder. All references in
this Indenture to the authentication of Debentures by the Trustee shall be
deemed to include authentication by an Authenticating Agent for such series
except for authentication upon original issuance or pursuant to Section 2.07
hereof. Each Authenticating Agent shall be acceptable to the Company and shall
be a corporation which has a combined capital and surplus, as most recently
reported or determined by it, sufficient under the laws of any jurisdiction
under which it is organized or in which it is doing business to conduct a trust
business, and which is otherwise authorized under such laws to conduct such
business and is subject to supervision or examination by Federal or State
authorities. If at any time any Authenticating Agent shall cease to be eligible
in accordance with these provisions, it shall resign immediately.
Any Authenticating Agent may at any time resign by giving written
notice of resignation to the Trustee and to the Company. The Trustee may at any
time (and upon request by the Company shall) terminate the agency of any
Authenticating Agent by giving written notice of termination to such
Authenticating Agent and to the Company. Upon resignation, termination or
cessation of eligibility of any Authenticating Agent, the Trustee may appoint an
eligible successor Authenticating Agent acceptable to the Company. Any successor
Authenticating Agent, upon acceptance of its appointment hereunder, shall become
vested with all the rights, powers and duties of its predecessor hereunder as if
originally named as an Authenticating Agent pursuant hereto.
SECTION 2.11. Global Debenture. (a) If the Company shall establish
pursuant to Section 2.01 that the Debentures of a particular series are to be
issued as one or more Global Debentures, then the Company shall execute and the
Trustee shall, in accordance with Section 2.04, authenticate and deliver, one or
more Global Debentures which (i) shall represent, and shall be denominated in an
aggregate amount equal to the aggregate principal amount of, all of the
Outstanding Debentures of such series, (ii) shall be registered in the name of
the Depositary or its nominee, (iii) shall be delivered by the
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Trustee to the Depositary or pursuant to the Depositary's instruction and (iv)
shall bear a legend substantially to the following effect: "Except as otherwise
provided in Section 2.11 of the Indenture, this Debenture may be transferred, in
whole but not in part, only to another nominee of the Depositary or to a
successor Depositary or to a nominee of such successor Depositary."
(b) Notwithstanding the provisions of Section 2.05, the Global
Debenture of a series may be transferred, in whole but not in part and in the
manner provided in Section 2.05, only to another nominee of the Depositary for
such series, or to a successor Depositary for such series selected or approved
by the Company or to a nominee of such successor Depositary.
(c) If at any time the Depositary for a series of Debentures notifies
the Company that it is unwilling or unable to continue as Depositary for such
series or if at any time the Depositary for such series shall no longer be
registered or in good standing under the Exchange Act, or other applicable
statute or regulation and a successor Depositary for such series is not
appointed by the Company within 90 days after the Company receives such notice
or becomes aware of such condition, as the case may be, this Section 2.11 shall
no longer be applicable to the Debentures of such series and the Company will
execute, and subject to Section 2.05, the Trustee will authenticate and make
available for delivery Debentures of such series in definitive registered form
without coupons, in authorized denominations, and in an aggregate principal
amount equal to the principal amount of the Global Debentures of such series in
exchange for such Global Debenture. In addition, the Company may at any time
determine that the Debentures of any series shall no longer be represented by
one or more Global Debentures and that the provisions of this Section 2.11 shall
no longer apply to the Debentures of such series. In such event the Company will
execute and subject to Section 2.05, the Trustee, upon receipt of an Officers'
Certificate evidencing such determination by the Company, will authenticate and
deliver Debentures of such series in definitive registered form without coupons,
in authorized denominations, and in an aggregate principal amount equal to the
principal amount of the Global Debentures of such series in exchange for such
Global Debentures. Upon the exchange of the Global Debentures for such
Debentures in definitive registered form without coupons, in authorized
denominations, the Global Debentures shall be canceled by the Trustee. Such
Debentures in definitive registered form issued in exchange for the Global
Debentures pursuant to this Section 2.11(c) shall be registered in such names
and in such authorized denominations as the Depositary, pursuant to instructions
from its direct or indirect participants or otherwise, shall instruct the
Trustee. The Trustee shall deliver such Debentures to the Depositary for
delivery to the persons in whose names such Debentures are so registered.
SECTION 2.12. CUSIP Numbers. The Company in issuing the Debentures may
use "CUSIP" and "CINS" numbers (if then generally in use), and the Trustee shall
use CUSIP numbers or CINS numbers, as the case may be, in notices of redemption
or
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exchange as a convenience to Debentureholders and no representation shall be
made as to the correctness of such numbers either as printed on the Debentures
or as contained in any notice of redemption or exchange.
ARTICLE 3
REDEMPTION OF DEBENTURES AND SINKING FUND PROVISIONS
SECTION 3.01. Redemption of Debentures. The Company may redeem the
Debentures of any series issued hereunder on and after the dates and in
accordance with the terms established for such series pursuant to Section 2.01
hereof.
SECTION 3.02. Notice of Redemption. (a) In case the Company shall
desire to exercise such right to redeem all or, as the case may be, a portion of
the Debentures of any series in accordance with the right reserved so to do, it
shall give notice of such redemption to holders of the Debentures of such series
to be redeemed by mailing, first class postage prepaid, a notice of such
redemption not less than 30 days and not more than 60 days before the date fixed
for redemption of that series to such holders at their last addresses as they
shall appear upon the Debenture Register. Any notice which is mailed in the
manner herein provided shall be conclusively presumed to have been duly given,
whether or not the registered holder receives the notice. In any case, failure
duly to give such notice to the holder of any Debenture of any series designated
for redemption in whole or in part, or any defect in the notice, shall not
affect the validity of the proceedings for the redemption of any other
Debentures of such series or any other series. In the case of any redemption of
Debentures prior to the expiration of any restriction on such redemption
provided in the terms of such Debentures or elsewhere in this Indenture, the
Company shall furnish the Trustee with an Officers' Certificate evidencing
compliance with any such restriction.
Each such notice of redemption shall specify the date fixed for
redemption and the redemption price at which Debentures of that series are to be
redeemed, and shall state that payment of the redemption price of such
Debentures to be redeemed will be made at the office or agency of the Company in
the Borough of Manhattan, the City and State of New York, upon presentation and
surrender of such Debentures, that interest accrued to the date fixed for
redemption will be paid as specified in said notice, that from and after said
date interest will cease to accrue and that the redemption is for a sinking
fund, if such is the case. If less than all the Debentures of a series are to be
redeemed, the notice to the holders of Debentures of that series to be redeemed
in whole or in part shall specify the
particular Debentures to be so redeemed. In case any Debenture is to be redeemed
in part only, the notice which relates to such Debenture shall state the portion
of the principal amount thereof to be redeemed, and shall state that on and
after the redemption date,
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upon surrender of such Debenture, a new Debenture or Debentures of such series
in principal amount equal to the unredeemed portion thereof will be issued.
(b) If less than all the Debentures of a series are to be redeemed, the
Company shall give the Trustee at least 45 days' notice in advance of the date
fixed for redemption as to the aggregate principal amount of Debentures of the
series to be redeemed, and thereupon the Trustee shall select, by lot or in such
other manner as it shall deem appropriate and fair in its discretion and which
may provide for the selection of a portion or portions (equal to $50 or any
integral multiple thereof) of the principal amount of such Debentures of a
denomination larger than $50, the Debentures to be redeemed and shall thereafter
promptly notify the Company in writing of the numbers of the Debentures to be
redeemed, in whole or in part.
The Company may, if and whenever it shall so elect, by delivery of
instructions signed on its behalf by its President or any Vice President,
instruct the Trustee or any paying agent to call all or any part of the
Debentures of a particular series for redemption and to give notice of
redemption in the manner set forth in this Section, such notice to be in the
name of the Company or its own name as the Trustee or such paying agent may deem
advisable. In any case in which notice of redemption is to be given by the
Trustee or any such paying agent, the Company shall deliver or cause to be
delivered to, or permit to remain with, the Trustee or such paying agent, as the
case may be, such Debenture Register, transfer books or other records, or
suitable copies or extracts therefrom, sufficient to enable the Trustee or such
paying agent to give any notice by mail that may be required under the
provisions of this Section.
SECTION 3.03. Debentures Due and Payable. (a) If the giving of notice
of redemption shall have been completed as above provided, the Debentures or
portions of Debentures of the series to be redeemed specified in such notice
shall become due and payable on the date and at the place stated in such notice
at the applicable redemption price, together with interest accrued to the date
fixed for redemption and interest on such Debentures or portions of Debentures
shall cease to accrue on and after the date fixed for redemption, unless the
Company shall default in the payment of such redemption price and accrued
interest with respect to any such Debenture or portion thereof. On presentation
and surrender of such Debentures on or after the date fixed for redemption at
the place of payment specified in the notice, said Debentures shall be paid and
redeemed at the applicable redemption price for such series, together with
interest accrued thereon to the date fixed for redemption (but if the date fixed
for redemption is an Interest Payment Date, the interest installment payable on
such date shall be payable to the registered holder at the close of business on
the applicable record date pursuant to Section 2.03).
(b) Upon presentation of any Debenture of such series which is to be
redeemed in part only, the Company shall execute and the Trustee shall
authenticate and the office or
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agency where the Debenture is presented shall make available for delivery to the
holder thereof, at the expense of the Company, a new Debenture or Debentures of
the same series, of authorized denominations in principal amount equal to the
unredeemed portion of the Debenture so presented.
SECTION 3.04. Sinking Funds for Debentures. The provisions of Sections
3.04, 3.05 and 3.06 shall be applicable to any sinking fund for the retirement
of Debentures of a series, except as otherwise specified as contemplated by
Section 2.01 for Debentures of such series.
The minimum amount of any sinking fund payment provided for by the
terms of Debentures of any series is herein referred to as a "mandatory sinking
fund payment", and any payment in excess of such minimum amount provided for by
the terms of Debentures of any series is herein referred to as on "optional
sinking fund payment". If provided for by the terms of Debentures for any
series, the cash amount of any sinking fund payment may be subject to reduction
as provided in Section 3.05. Each sinking fund payment shall be applied to the
redemption of Debentures of any series as provided for by the terms of
Debentures of such series.
SECTION 3.05. Satisfaction of Sinking Fund Payments With Debentures.
The Company (i) may deliver outstanding Debentures of a series (other than any
previously called for redemption) and (ii) may apply as a credit Debentures of a
series which have been redeemed either at the election of the Company pursuant
to the terms of such Debentures or through the application of permitted optional
sinking fund payments pursuant to the terms of such Debentures, in each case in
satisfaction of all or any part of any sinking fund payment with respect to the
Debentures of such series required to be made pursuant to the terms of such
Debentures as provided for by the terms of such series; provided that such
Debentures have not been previously so credited. Such Debentures shall be
received and credited for such purpose by the Trustee at the redemption price
specified in such Debentures for redemption through operation of the sinking
fund and the amount of such sinking fund payment shall be reduced accordingly.
SECTION 3.06. Redemption of Debentures for Sinking Fund. Not less than
45 days prior to each sinking fund payment date for any series of Debentures,
the Company will deliver to the Trustee an Officers' Certificate specifying the
amount of the next ensuing sinking fund payment for that series pursuant to the
terms for that series, the portion thereof, if any, which is to be satisfied by
delivering and crediting Debentures of that series pursuant to Section 3.05 and
the basis for such credit and will, together with such Officers' Certificate,
deliver to the Trustee any Debentures to be so delivered. Not less than 30 days
before each such sinking fund payment date the Trustee shall select the
Debentures to be redeemed upon such sinking fund payment date in the manner
specified in Section 3.02 and cause notice of the redemption thereof to be given
in the name of and at the expense of the Company in the manner provided in
Section 3.02. Such notice
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having been duly given, the redemption of such Debentures shall be made upon the
terms and in the manner stated in Section 3.03.
ARTICLE 4
PARTICULAR COVENANTS OF THE COMPANY
The Company covenants and agrees for each series of the Debentures as follows:
SECTION 4.01. Payment of Principal of (And Premium, if any) and
Interest on Debentures. The Company will duly and punctually pay or cause to be
paid the principal of (and premium, if any) and interest on the Debentures of
that series at the time and place and in the manner provided herein and
established with respect to such Debentures.
SECTION 4.02. Maintenance of Office or Agent for Payment of Debentures,
Designation of Office or Agency for Payment, Registration, Transfer and Exchange
of Debentures. So long as any series of the Debentures remain outstanding, the
Company agrees to maintain an office or agency in the Borough of Manhattan, The
City and State of New York, with respect to each such series and at such other
location or locations as may be designated as provided in this Section 4.02,
where (i) Debentures of that series may be presented for payment, (ii)
Debentures of that series may be presented as herein above authorized for
registration of transfer and exchange, and (iii) notices and demands to or upon
the Company in respect of the Debentures of that series and this Indenture may
be given or served, such designation to continue with respect to such office or
agency until the Company shall, by written notice signed by its President or a
Vice President and delivered to the Trustee, designate some other office or
agency for such purposes or any of them. If at any time the Company shall fail
to maintain any such required office or agency or shall fail to furnish the
Trustee with the address thereof, such presentations, notices and demands may be
made or served at the Corporate Trust Office of the Trustee, and the Company
hereby appoints the Trustee as its agent to receive all such presentations,
notices and demands.
SECTION 4.03. Duties of Paying Agent; Company as Payment Agent; and
Holding Sums of Trust. (a) If the Company shall appoint one or more paying
agents for all or any series of the Debentures, other than the Trustee, the
Company will cause each such paying agency to execute and deliver to the Trustee
an instrument in which such agent shall agree with the Trustee, subject to the
provisions of this Section:
(1) that it will hold all sums held by it as such agent for
the payment of the principal of (and premium, if any) or
interest on the Debentures of that series (whether such sums
have been paid to it by the Company or by any
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other obligor of such Debentures) in trust for the benefit of
the persons entitled thereto:
(2) that it will give the Trustee written notice of any
failure by the Company (or by any other obligor of such
Debentures) to make any payment of the principal of (and
premium, if any) or interest on the Debentures of that series
when the same shall be due and payable;
(3) that it will, at any time during the continuance of any
failure referred to in the preceding paragraph (a)(2) above,
upon the written request of the Trustee, forthwith pay to the
Trustee all sums so held in trust by such paying agent; and
(4) that it will perform all other duties of paying agent as
set forth in this Indenture.
(b) If the Company shall act as its own paying agent with respect to
any series of the Debentures, it will on or before each due date of the
principal of (and premium, if any) or interest on Debentures of that series, set
aside, segregate and hold in trust for the benefit of the persons entitled
thereto a sum sufficient to pay such principal (and premium, if any) or interest
so becoming due on Debentures of that series until such sums shall be paid to
such persons or otherwise disposed of as herein provided and will promptly
notify in writing the Trustee of such action, or any failure (by it or any other
obligor on such Debentures) to take such action. Whenever the Company shall have
one or more paying agents for any series of Debentures, it will, prior to each
due date of the principal of (and premium, if any) or interest on any Debentures
of that series, deposit with the paying agent a sum sufficient to pay the
principal (and premium, if any) or interest so becoming due, such sum to be held
in trust for the benefit of the persons entitled to such principal, premium or
interest, and (unless such paying agent is the Trustee) the Company will
promptly notify the Trustee of its action or failure so to act.
(c) Anything in this Section to the contrary notwithstanding, (i) the
agreement to hold sums in trust as provided in this Section is subject to the
provisions of Section 11.04, and (ii) the Company may at any time, for the
purpose of obtaining the satisfaction and discharge of this Indenture or for any
other purpose, pay, or direct any paying agent to pay, to the Trustee all sums
held in trust by the Company or such paying agent, such sums to be held by the
Trustee upon the same terms and conditions as those upon which such sums were
held by the Company or such paying agent; and, upon such payment by any paying
agent to the Trustee, such paying agent shall be released from all further
liability with respect to such money.
SECTION 4.04. Appointment to Fill Vacancy in Office of Trustee. The
Company, whenever necessary to avoid or fill a vacancy in the office of Trustee,
will appoint, in the
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manner provided in Section 7.10, a Trustee, so that there shall at all times be
a Trustee hereunder.
ARTICLE 5
DEBENTUREHOLDER'S LISTS AND REPORTS BY THE COMPANY AND THE TRUSTEE
SECTION 5.01. Company to Furnish Trustee Information as to Names and
Addresses of Debentures. The Company will furnish or cause to be furnished to
the Trustee (a) on a quarterly basis on each regular record date (as defined in
Section 2.03) a list, in such form as the Trustee may reasonably require, of the
names and addresses of the holders of each series of Debentures as of such
regular record date, provided, that the Company shall not be obligated to
furnish or cause to furnish such list at any time that the list shall not differ
in any respect from the most recent list furnished to the Trustee by the Company
and (b) at such other times as the Trustee may request in writing within 30 days
after the receipt by the Company of any such request, a list of similar form and
content as of a date not more than 15 days prior to the time such list is
furnished; provided, however, no such list need be furnished for any series for
which the Trustee shall be the Debenture Registrar.
SECTION 5.02. Trustee to Preserve Information as to Names and Addresses
of Debentureholders. (a) The Trustee shall preserve, in as current a form as is
reasonably practicable, all information as to the names and addresses of the
holders of Debentures contained in the most recent list furnished to it as
provided in Section 5.01 and as to the names and addresses of holders of
Debentures received by the Trustee in its capacity as Debenture Registrar (if
acting in such capacity).
(b) The Trustee may destroy any list furnished to it as provided in
Section 5.01 upon receipt of a new list so furnished.
(c) In case three or more holders of Debentures of a series
(hereinafter referred to as "applicants") apply in writing to the Trustee, and
furnish to the Trustee reasonable proof that each such applicant has owned a
Debenture for a period of at least six months preceding the date of such
application, and such application states that the applicants desire to
communicate with other holders of Debentures of such series or holders of all
Debentures with respect to their rights under this Indenture or under such
Debentures, and is accompanied by a copy of the form of proxy or other
communication which such applicants propose to transmit, then the Trustee shall
within five business days after the receipt of such application, at its
election, either:
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(1) afford to such applicants access to the information
preserved at the time by the Trustee in accordance with the
provisions of subsection (a) of this Section 5.02; or
(2) inform such applicants as to the approximate number of
holders of Debentures of such series or of all Debentures, as
the case may be, whose names and addresses appear in the
information preserved at the time by the Trustee, in
accordance with the provisions of subsection (a) of this
Section 5.02, and as to the approximate cost of mailing to
such Debentureholders the form of proxy or other
communication, if any, specified in such application.
(d) If the Trustee shall elect not to afford such applicants access to
such information, the Trustee shall, upon the written request of such
applicants, mail to each holder of such series or of all Debentures, as the case
may be, whose name and address appears in the information preserved at the time
by the Trustee in accordance with the provisions of subsection (a) of this
Section 5.02, a copy of the form of proxy or other communication which is
specified in such request, with reasonable promptness after a tender to the
Trustee of the material to be mailed and of payment, or provision for the
payment, of the reasonable expenses of mailing, unless within five days after
such tender, the Trustee shall mail to such applicants and file with the
Securities and Exchange Commission (the "Commission"), together with a copy of
the material to be mailed, a written statement to the effect that, in the
opinion of the Trustee, such mailing would be contrary to the best interests of
the holders of Debentures of such series or of all Debentures, as the case may
be, or would be in violation of applicable law. Such written statement shall
specify the basis of such opinion. If the Commission, after opportunity for a
hearing upon the objections specified in the written statement so filed, shall
enter an order refusing to sustain any of such objections or if, after the entry
of an order sustaining one or more of such objections, the Commission shall
find, after notice and opportunity for hearing, that all the objections so
sustained have been met and shall enter an order so declaring, the Trustee shall
mail copies of such material to all such Debentureholders with reasonable
promptness after the entry of such order and the renewal of such tender;
otherwise, the Trustee shall be relieved of any obligation or duty to such
applicants respecting their application.
(e) Each and every holder of the Debentures, by receiving and holding
the same, agrees with the Company and the Trustee that neither the Company nor
the Trustee nor any paying agent nor any Debenture Registrar shall be held
accountable by reason of the disclosure of any such information as to the names
and addresses of the holders of Debentures in accordance with the provisions of
subsection (b) of this Section, regardless of the source from which such
information was derived, and that the Trustee shall not be held accountable by
reason of mailing any material pursuant to a request made under said subsection
(b).
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SECTION 5.03. Annual and Other Reports to Be Filed by Company With
Trustee. (a) The Company covenants and agrees to file with the Trustee, within
15 days after the Company is required to file the same with the Commission,
copies of the annual reports and of the information, documents and other reports
(or copies of such portions of any of the foregoing as the Commission may from
time to time by rules and regulations prescribe) which the Company may be
required to file with the Commission pursuant to Section 13 or Section 15 (d) of
the Exchange Act; or, if the Company is not required to file information,
documents or reports pursuant to either of such sections, then to file with the
Trustee and the Commission in accordance with the rules and regulations
prescribed from time to time by the Commission, such of the supplementary and
periodic information, documents and reports which may be required pursuant to
Section 13 of the Exchange Act, in respect of a security listed and registered
on a national securities exchange as may be prescribed from time to time in such
rules and regulations. Delivery of such reports, information and documents to
the Trustee is for informational purposes only and the Trustee's receipt of such
shall not constitute constructive notice of any information contained therein,
including the Company's compliance with any of its covenants hereunder (as to
which the Trustee is entitled to rely exclusively on Officers' Certificates).
(b) The Company covenants and agrees to file with the Trustee and the
Commission, in accordance with the rules and regulations prescribed from time to
time by the Commission, such additional information, documents and reports with
respect to compliance by the Company with the conditions and covenants provided
for in this Indenture as may be required from time to time by such rules and
regulations.
(c) The Company covenants and agrees to transmit by mail, first class
postage prepaid, or reputable over-night delivery service which provides for
evidence of receipt, to the Debentureholders, as their names and addresses
appear upon the Debenture Register, within 30 days after the filing thereof with
the Trustee, such summaries of any information, documents and reports required
to be filed by the Company pursuant to subsections (a) and (b) of this Section
as may be required by rules and regulations prescribed from time to time by the
Commission.
(d) The Company covenants and agrees to furnish to the Trustee, on or
before May 15 in each calendar year in which any of the Debentures are
outstanding, or on or before such other day in each calendar year as the Company
and the Trustee may from time to time agree upon, a Certificate as to his or her
knowledge of the Company's compliance with all conditions and covenants under
this Indenture. For purposes of this subsection (d), such compliance shall be
determined without regard to any period of grace or requirement of notice
provided under this Indenture.
SECTION 5.04. Trustee to Transmit Annual Report to Debentureholders.
(a) On or before July 15 in each year in which any of the Debentures are
outstanding, the Trustee
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shall transmit by mail, first class postage prepaid, to the Debentureholders, as
their names and addresses appear upon the Debenture Register, a brief report
dated as of the preceding May 15, with respect to any of the following events
which may have occurred within the previous twelve months (but if no such event
has occurred within such period no report need be transmitted):
(1) any change to its eligibility under Section 7.09, and its
qualifications under Section 7.08;
(2) the creation of or any material change to a relationship
specified in paragraphs (1) through (10) of subsection (c) of
Section 7.08;
(3) the character and amount of any advances (and if the
Trustee elects so to state, the circumstances surrounding the
making thereof) made by the Trustee (as such) which remain
unpaid on the date of such report, and for the reimbursement
of which it claims or may claim a lien or charge, prior to
that of the Debentures, on any property or funds held or
collected by it as Trustee if such advances so remaining
unpaid aggregate more than 1/2 of 1% of the principal amount
of the Debentures outstanding on the date of such report;
(4) any change to the amount, interest rate, and maturity date
of all other indebtedness owing by the Company, or by any
other obligor on the Debentures, to the Trustee in its
individual capacity, on the date of such report, with a brief
description of any property held as collateral security
therefor, except any indebtedness based upon a creditor
relationship arising in any manner described in paragraph (2),
(3), (4), or (6) of subsection (b) of Section 7.13;
(5) any change to the property and funds, if any, physically
in the possession of the Trustee as such on the date of such
report;
(6) any release, or release and substitution, of property
subject to the lien of this Indenture (and the consideration
thereof, if any) which it has not previously reported;
(7) any additional issue of Debentures which the Trustee has
not previously reported; and
(8) any action taken by the Trustee in the performance of its
duties under this Indenture which it has not previously
reported and which in its opinion materially affects the
Debentures or the Debentures of any series,
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except any action in respect of a default, notice of which has
been or is to be withheld by it in accordance with the
provisions of Section 6.07.
(b) The Trustee shall transmit by mail, first class postage prepaid, to
the Debentureholders, as their names and addresses appear upon the Debenture
Register, a brief report with respect to the character and amount of any
advances (and if the Trustee elects so to state, the circumstances surrounding
the making thereof) made by the Trustee as such since the date of the last
report transmitted pursuant to the provisions of subsection (a) of this Section
(or if no such report has yet been so transmitted, since the date of execution
of this Indenture), for the reimbursement of which it claims or may claim a lien
or charge prior to that of the Debentures of any series on property or funds
held or collected by it as Trustee, and which it has not previously reported
pursuant to this subsection if such advances remaining unpaid at any time
aggregate more than 10% of the principal amount of Debentures of such series
outstanding at such time, such report to be transmitted within 90 days after
such time.
(c) A copy of each such report shall, at the time of such transmission
to Debentureholders, be filed by the Trustee with the Company, with each stock
exchange upon which any Debentures are listed (if so listed) and also with the
Commission. The Company agrees to notify the Trustee when any Debentures become
listed on any stock exchange.
ARTICLE 6
REMEDIES OF THE TRUSTEE AND DEBENTUREHOLDERS ON EVENT OF DEFAULT
SECTION 6.01. Events of Default Defined. (a) Whenever used herein with
respect to Debentures of a particular series, "Event of Default" means any one
or more of the following events which has occurred and is continuing:
(1) default in the payment of any installment of interest upon
any of the Debentures of that series, as and when the same
shall become due and payable, and continuance of such default
for a period of 30 days; provided, however, that a valid
extension of an interest payment period by the Company in
accordance with the terms of any indenture supplemental
hereto, shall not constitute a default in the payment of
interest for this purpose;
(2) default in the payment of the principal of (or premium, if
any, on) any of the Debentures of that series as and when the
same shall become due and payable whether at maturity, upon
redemption, by declaring or
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otherwise, or in any payment required by any sinking or
analogous fund established with respect to that series;
(3) failure on the part of the Company duly to observe or
perform any other of the covenants or agreements on the part
of the Company with respect to that series contained in such
Debentures or otherwise established with respect to that
series of Debentures pursuant to Section 2.01 hereof or
contained in this Indenture (other than a covenant or
agreement which has been expressly included in this Indenture
solely for the benefit of one or more series of Debentures
other than such series) for a period of 90 days after the date
on which written notice of such failure, requiring the same to
be remedied and stating that such notice is a "Notice of
Default" hereunder, shall have been given to the Company by
the Trustee, by registered or certified mail, or to the
Company and the Trustee by the holders of at least 25% in
principal amount of the Debentures of that series at the time
outstanding;
(4) a decree or order by a court having jurisdiction in the
premises shall have been entered adjudging the Company as
bankrupt or insolvent, or approving as properly filed a
petition seeking liquidation or reorganization of the Company
under the Federal Bankruptcy Code or any other similar
applicable Federal or State law, and such decree or order
shall have continued unvacated and unstayed for a period of 90
days; or an involuntary case shall be commenced under such
Code in respect of the Company and shall continue undismissed
for a period of 90 days or an order for relief in such case
shall have been entered; or a decree or order of a court
having jurisdiction in the premises shall have been entered
for the appointment on the ground of insolvency or bankruptcy
of a receiver or custodian or liquidator or trustee or
assignee in bankruptcy or insolvency of the Company or of its
property, or for the winding up or liquidation of its affairs,
and such decree or order shall have remained in force
unvacated and unstayed for a period of 90 days; or
(5) the Company shall institute proceedings to be adjudicated
a voluntary bankrupt, or shall consent to the filing of a
bankruptcy proceeding against it, or shall file a petition or
answer or consent seeking liquidation or reorganization under
the Federal Bankruptcy Code or any other similar applicable
Federal or State law, or shall consent to the filing of any
such petition, or shall consent to the appointment on the
ground of insolvency or bankruptcy of a receiver or custodian
or liquidator or trustee or assignee in bankruptcy or
insolvency of it or of its property, or shall make an
assignment for the benefit of creditors.
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(b) In each and every such case, unless the principal of all the
Debentures of that series shall have already become due and payable, either the
Trustee or the holders of not less than 25% in aggregate principal amount of the
Debentures of that series then outstanding hereunder, by notice in writing to
the Company (and to the Trustee if given by such Debentureholders), may declare
the principal of all the Debentures of that series to be due and payable
immediately, and upon any such declaration the same shall become and shall be
immediately due and payable, anything contained in this Indenture or in the
Debentures of that series or established with respect to that series pursuant to
Section 2.01 hereof to the contrary notwithstanding.
(c) Section 6.01(b), however, is subject to the condition that if, at
any time after the principal of the Debentures of that series shall have been so
declared due and payable, and before any judgment or decree for the payment of
the moneys due shall have been obtained or entered as hereinafter provided, the
Company shall pay or shall deposit with the Trustee a sum sufficient to pay all
matured installments of interest upon all the Debentures of that series and the
principal of (and premium, if any, on) any and all Debentures of that series
which shall have become due otherwise than by acceleration (with interest upon
such principal and premium, if any, and, to the extent that such payment is
enforceable under applicable law, upon overdue installments of interest, at the
rate per annum expressed in the Debentures of that series to the date of such
payment or deposit) and the amount payable to the Trustee under Section 7.06,
and any and all defaults under the Indenture, other than the nonpayment of
principal on Debentures of that series which shall not have become due by their
terms, shall have been remedied or waived as provided in Section 6.06 then and
in every such case the holders of a majority in aggregate principal amount of
the Debentures of that series then outstanding (subject to, in the case of any
series of Debentures held as trust assets of a AES Trust and with respect to
which a Security Exchange has not theretofore occurred, such consent of the
holders of the Preferred Securities and the Common Securities of such AES Trust
as may be required under the Declaration of Trust of such AES Trust), by written
notice to the Company and to the Trustee, may rescind and annul such declaration
and its consequences with respect to that series of Debentures; but no such
rescission and annulment shall extend to or shall affect any subsequent default,
or shall impair any right consequent thereon.
(d) In case the Trustee shall have proceeded to enforce any right with
respect to Debentures of that series under this Indenture and such proceedings
shall have been discontinued or abandoned because of such rescission or
annulment or for any other reason or shall have been determined adversely to the
Trustee, then and in every such case the Company and the Trustee shall be
restored respectively to their former positions and rights hereunder, and all
rights, remedies and powers of the Company and the Trustee shall continue as
though no such proceedings had been taken.
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(e) If, prior to a Security Exchange with respect to the Debentures of
any series, a Default with respect to the Debentures of such series shall have
occurred, the Company expressly acknowledges that under the circumstances set
forth in the applicable Declaration of Trust, any holder of Preferred Securities
of the applicable AES Trust may enforce directly against the Company the
applicable Property Trustee's rights hereunder. In furtherance of the foregoing
and for the avoidance of any doubt, the Company acknowledges that, under the
circumstances described in the applicable Declaration of Trust, any such holder
of Preferred Securities, in its own name, in the name of the applicable AES
Trust or in the name of the holders of the Preferred Securities issued by such
AES Trust, may institute or cause to be instituted a proceeding, including,
without limitation, any suit in equity, an action at law or other judicial or
administrative proceeding, to enforce the applicable Property Trustee's rights
hereunder directly against the Company as issuer of the applicable series of
Debentures, and may prosecute such proceeding to judgment or final decree, and
enforce the same against the Company.
SECTION 6.02. Covenant of Company to Pay to Trustee Whole Amount Due on
Debentures on Default in Payment of Interest or Principal (and Premiums, if
any). (a) The Company covenants that (1) in case default shall be made in the
payment of any installment of interest on any of the Debentures of a series, or
any payment required by any sinking or analogous fund established with respect
to that series as and when the same shall have become due and payable, and such
default shall have continued for a period of 10 business days, or (2) in case
default shall be made in the payment of the principal of (or premium, if any,
on) any of the Debentures of a series when the same shall have become due and
payable, whether upon maturity of the Debentures of a series or upon redemption
or upon declaration or otherwise, then, upon demand of the Trustee, the Company
will pay to the Trustee, for the benefit of the holders of the Debentures of
that series, the whole amount that then shall have become due and payable on all
such Debentures for principal (and premium, if any) or interest, or both, as the
case may be, with interest upon the overdue principal (and premium, if any) and
(to the extent that payment of such interest is enforceable under applicable law
and without duplication of any other amounts paid by the Company or the
applicable AES Trust in respect thereof) upon overdue installments of interest
at the rate per annum expressed in the Debentures of that series; and, in
addition thereto, such further amount as shall be sufficient to cover the costs
and expenses of collection, and the amount payable to the Trustee under Section
7.06.
(b) In case the Company shall fail forthwith to pay such amounts upon
such demand, the Trustee, in its own name and as trustee of an express trust,
shall be entitled and empowered to institute any action or proceedings at law or
in equity for the collection of the sums so due and unpaid, and may prosecute
any such action or proceeding to judgment or final decree, and may enforce any
such judgment or final decree against the Company or other obligor upon the
Debentures of that series and collect in the manner
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provided by law out of the property of the Company or other obligor upon the
Debentures of that series wherever situated the moneys adjudged or decreed to be
payable.
(c) In case of any receivership, insolvency, liquidation, bankruptcy,
reorganization, readjustment, arrangement, composition or other judicial
proceedings affecting the Company, any other obligor on such Debentures, or the
creditors or property of either, the Trustee shall have the power to intervene
in such proceedings and take any action therein that may be permitted by the
court and shall (except as may be otherwise provided by law) be entitled to file
such proofs of claim and other papers and documents as may be necessary or
advisable in order to have the claims of the Trustee and of the holders of
Debentures of such series allowed for the entire amount due and payable by the
Company or such other obligor under the Indenture at the date of institution of
such proceedings and for any additional amount which may become due and payable
by the Company or such other obligor after such date, and to collect and receive
any moneys or other property payable or deliverable on any such claim, and to
distribute the same after the deduction of the amount payable to the Trustee
under Section 7.06; and any receiver, assignee or trustee in bankruptcy or
reorganization is hereby authorized by each of the holders of Debentures of such
series to make such payments to the Trustee, and, in the event that the Trustee
shall consent to the making of such payments directly to such Debentureholders,
to pay to the Trustee any amount due it under Section 7.06.
(d) All rights of action and of asserting claims under this Indenture,
or under any of the terms established with respect to Debentures of that series,
may be enforced by the Trustee without the possession of any of such Debentures,
or the production thereof at any trial or other proceeding relative thereto, and
any such suit or proceeding instituted by the Trustee shall be brought in its
own name as trustee of an express trust, and any recovery of judgment shall,
after provision for payment to the Trustee of any amounts due under Section
7.06, be for the ratable benefit of the holders of the Debentures of such
series.
In case of an Event of Default hereunder, the Trustee may in its
discretion proceed to protect and enforce the rights vested in it by this
Indenture by such appropriate judicial proceedings as the Trustee shall deem
most effectual to protect and enforce any of such rights, either at law or in
equity or in bankruptcy or otherwise, whether for the specific enforcement of
any covenant or agreement contained in the Indenture or in aid of the exercise
of any power granted in this Indenture, or to enforce any other legal or
equitable right vested in the Trustee by this Indenture or by law.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Debentureholder any
plan of reorganization, arrangement, adjustment or composition affecting the
Debentures of that series or the rights of any holder thereof or to authorize
the Trustee to vote in respect of the claim of any Debentureholder in any such
proceeding.
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SECTION 6.03. Application of Moneys Collected by Trustee. Any moneys
collected by the Trustee pursuant to Section 6.02 with respect to a particular
series of Debentures shall be applied in the order following, at the date or
dates fixed by the Trustee and, in case of the distribution of such moneys on
account of principal (or premium, if any) or interest, upon presentation of the
several Debentures of that series, and stamping thereon the payment, if only
partially paid, and upon surrender thereof if fully paid:
FIRST: To the payment of costs and expenses of collection and
of all amounts payable to the Trustee under Section 7.06; and
SECOND: To the payment of the amounts then due and unpaid upon
Debentures of such series for principal (and premium, if any)
and interest, in respect of which or for the benefit of which
such money has been collected, ratably, without preference or
priority of any kind, according to the amounts due and payable
on such Debentures for principal (and premium, if any) and
interest, respectively.
SECTION 6.04. Limitation on Suits by Holders of Debentures. No holder
of any Debenture of any series shall have any right by virtue or by availing of
any provision of this Indenture to institute any suit, action or proceeding in
equity or at law upon or under or with respect to this Indenture or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless
such holder previously shall have given to the Trustee written notice of an
Event of Default and of the continuance thereof with respect to Debentures of
such series specifying such Event of Default, as hereinbefore provided, and
unless also the holders of not less than 25% in aggregate principal amount of
the Debentures of such series then outstanding shall have made written request
upon the Trustee to institute such action, suit or proceeding in its own name as
trustee hereunder and shall have offered to the Trustee such reasonable
indemnity as it may require against the costs, expenses and liabilities to be
incurred therein or thereby, and the Trustee for 60 days after its receipt of
such notice, request and offer of indemnity, shall have failed to institute any
such action, suit or proceeding; it being understood and intended, and being
expressly covenanted by the taker and holder of every Debenture of such series
with every other such taker and holder and Trustee, that no one or more holders
of Debentures of such series shall have any right in any manner whatsoever by
virtue or by availing of any provision of this Indenture to affect, disturb or
prejudice the rights of the holders of any other of such Debentures, or to
obtain or seek to obtain priority over or preference to any other such holder,
or to enforce any right under this Indenture, except in the manner herein
provided and for the equal, ratable and common benefit of all holders of
Debentures of such series. For the protection and enforcement of the provisions
of this Section, each and every Debentureholder and the Trustee shall be
entitled to such relief as can be given either at law or in equity.
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Notwithstanding any other provisions of this Indenture, however, the
right of any holder of any Debenture to receive payment of the principal of (and
premium, if any) and interest on such Debenture, as therein provided, on or
after the respective due dates expressed in such Debenture (or in the case of
redemption, on the redemption date), or to institute suit for the enforcement of
any such payment on or after such respective dates or redemption date, shall not
be impaired or affected without the consent of such holder.
SECTION 6.05. Remedies Cumulative; Delay or Omission in Exercise of
Rights Not Waiver of Default. (a) All powers and remedies given by this Article
to the Trustee or to the Debentureholders shall, to the extent permitted by law,
be deemed cumulative and not exclusive of any others thereof or of any other
powers and remedies available to the Trustee or the holders of the debentures,
by judicial proceedings or otherwise, to enforce performance or observance of
the covenants and agreements contained in this Indenture or otherwise
established with respect to such Debentures.
(b) No delay or omission of the Trustee or of any holder of any of the
Debentures to exercise any right or power accruing upon any Event of Default
occurring and continuing as aforesaid shall impair any such right or power, or
shall be construed to be a waiver of any such default or an acquiescence
therein; and, subject to the provisions of Section 6.04, every power and remedy
given by this Article or by law to the Trustee or to the Debentureholders may be
exercised from time to time, and as often as shall be deemed expedient, by the
Trustee or by the Debentureholders.
SECTION 6.06. Rights of Holders of Majority in Principal Amount of
Debentures to Direct Trustee and to Waive Defaults. The holders of a majority in
aggregate principal amount of the Debentures of any series at the time
outstanding, determined in accordance with Section 8.04 (with, in the case of
any series of Debentures held as trust assets of a AES Trust and with respect to
which a Security Exchange has not theretofore occurred, such consent of holders
of the Preferred Securities and the Common Securities of such AES Trust as may
be required under the Declaration of Trust of such AES Trust), shall have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or power conferred on
the Trustee with respect to such series; provided, however, that such direction
shall not be in conflict with any rule of law or with this Indenture or unduly
prejudicial to the rights of holders of Debentures of any other series at the
time outstanding determined in accordance with Section 8.04 not parties thereto.
Subject to the provisions of Section 7.01, the Trustee shall have the right to
decline to follow any such direction if the Trustee in good faith shall, by a
Responsible Officer or Officers of the Trustee, determine that the proceeding so
directed would involve the Trustee in personal liability. The holders of a
majority in aggregate principal amount of the Debentures of any series at the
time outstanding affected thereby, determined in accordance with section 8.04
(with, in the case of any series of Debentures held as trust assets of a AES
Trust and with respect to which a Security Exchange has not theretofore
occurred, such consent of holders of the Preferred
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Securities and the Common Securities of such AES Trust as may be required under
the Declaration of Trust of such AES Trust), may on behalf of the holders of all
of the Debentures of such series waive any past default in the performance of
any of the covenants contained herein or established pursuant to section 2.01
with respect to such series and its consequences, except a default in the
payment of the principal of, or premium, if any, or interest on, any of the
Debentures of that series as and when the same shall become due by the terms of
such Debentures otherwise than by acceleration (unless such default has been
cured and a sum sufficient to pay all matured installments of interest and
principal and any premium has been deposited with the Trustee (in accordance
with Section 6.01(c)) or a call for redemption of Debentures of that series.
Upon any such waiver, the default covered thereby shall be deemed to be cured
for all purposes of this Indenture and the Company, the Trustee and the holders
of the Debentures of such series shall be restored to their former positions and
rights hereunder, respectively; but no such waiver shall extend to any
subsequent or other default or impair any right consequent thereon.
SECTION 6.07. Trustee to Give Notice of Defaults Known To It, But May
Withhold in Certain Circumstances. The Trustee shall, within 90 days after the
occurrence of a default with respect to a particular series, transmit by mail,
first class postage prepaid, to the holders of Debentures of that series, as
their names and addresses appear upon the Debenture Register, notice of all
defaults with respect to that series known to the Trustee, unless such defaults
shall have been cured before the giving of such notice (the term "defaults" for
the purposes of this Section being hereby defined to be the events specified in
subsections (1), (2), (3), (4) and (5) of Section 6.01(a), not including any
periods of grace provided for therein and irrespective of the giving of notice
provided for by subsection (3) of Section 6.01(a)); provided, that, except in
the case of default in the payment of the principal of (or premium, if any) or
interest on any of the Debentures of that series or in the payment of any
sinking fund installment established with respect to that series, the Trustee
shall be protected in withholding such notice if and so long as the board of
directors, the executive committee, or a trust committee of directors and/or
Responsible Officers, of the Trustee in good faith determine that the
withholding of such notice is in the interests of the holders of Debentures of
that series; provided further, that in the case of any default of the character
specified in Section 6.01(a)(3) with respect to Debentures of such series no
such notice to the holders of the Debentures of that series shall be given until
at least 30 days after the occurrence thereof.
The Trustee shall not be deemed to have knowledge of any default,
except (i) a default under subsection (a)(1) or (a)(2) of Section 6.01 as long
as the Trustee is acting as paying agent for such series of Debentures or (ii)
any default as to which the Trustee shall have received written notice or a
Responsible Officer charged with the administration of this Indenture shall have
obtained written notice.
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SECTION 6.08. Requirements of an Undertaking to Pay Costs in Certain
Suits Under Indenture or Against Trustee. All parties to this Indenture agree,
and each holder of any Debentures by his or her acceptance thereof shall be
deemed to have agreed, that any court may in its discretion require, in any suit
for the enforcement of any right or remedy under this Indenture, or in any suit
against the Trustee for any action taken or omitted by it as Trustee, the filing
by any party litigant in such suit of an undertaking to pay the costs of such
suit, and that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees, against any party litigant in such suit,
having due regard to the merits and good faith of the claims or defenses made by
such party litigant; but the provisions of this Section shall not apply to any
suit instituted by the Trustee, to any suit instituted by any Debentureholder,
or group of Debentureholders, holding more than 10% in aggregate principal
amount of the outstanding Debentures of any series, or to any suit instituted by
any Debentureholder for the enforcement of the payment of the principal of (or
premium, if any) or interest on any Debenture of such series, on or after the
respective due dates expressed in such Debenture or established pursuant to this
Indenture.
ARTICLE 7
CONCERNING THE TRUSTEE
SECTION 7.01. Upon Event of Default Occurring and Continuing, Trustee
Shall Exercise Powers Vested In It, and Use Same Degree of Care and Skill In
Their Exercise, as Prudent Individual Would Use. (a) The Trustee, prior to the
occurrence of an Event of Default with respect to Debentures of a series and
after the curing of all Events of Default with respect to Debentures of that
series which may have occurred, shall undertake to perform with respect to
Debentures of such series such duties and only such duties as are specifically
set forth in this Indenture, and no implied covenants shall be read into this
Indenture against the Trustee. In case an Event of Default with respect to
Debentures of a series has occurred (which has not been cured or waived), the
Trustee shall exercise with respect to Debentures of that series such of the
rights and powers vested in it by this Indenture, and use the same degree of
care and skill in their exercise, as a prudent man would exercise or use under
the circumstances in the conduct of his own affairs.
(b) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own willful misconduct, except that:
(1) prior to the occurrence of an Event of Default with respect
to Debentures of a series and after the curing or waiving of all
such Events of Default with respect to that series which may have
occurred:
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(i) the duties and obligations of the Trustee shall
with respect to Debentures of such series be
determined solely by the express provisions of this
Indenture, and the Trustee shall not be liable with
respect to Debentures of such series except for the
performance of such duties and obligations as are
specifically set forth in this Indenture, and no
implied covenants or obligations shall be read into
this Indenture against the Trustee; and
(ii) in the absence of bad faith on the part of the
Trustee, the Trustee may with respect to Debentures
of such series conclusively rely, as to the truth of
the statements and the correctness of the opinions
expressed therein, upon any certificates or opinions
furnished to the Trustee and conforming to the
requirements of this Indenture; but in the case of
any such certificates or opinions which by any
provision hereof are specifically required to be
furnished to the Trustee, the Trustee shall be under
a duty to examine the same to determine whether or
not they conform to the requirements of this
Indenture but need not confirm or investigate the
accuracy of mathematical calculations or other facts
stated therein;
(2) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer or Responsible
Officers of the Trustee, unless it shall be proved that the
Trustee was negligent in ascertaining the pertinent facts;
(3) the Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in accordance
with the direction of the holders of not less than a majority
in principal amount of the Debentures of any series at the
time outstanding relating to the time, method and place of
conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred upon the
Trustee under this Indenture with respect to the Debentures of
that series; and
(4) none of the provisions contained in this Indenture shall
require the Trustee to expend or risk its own funds or
otherwise incur personal financial liability in the
performance of any of its duties or in the exercise of any of
its rights or powers, if there is reasonable ground for
believing
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that the repayment of such funds or liability is not
reasonably assured to it under the terms of this Indenture or
adequate indemnity against such risk is not reasonably assured
to it.
(5) Whether or not therein expressly so provided, every
provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the
Trustee shall be subject to the provisions of this Article 7.
SECTION 7.02. Subject to Provisions of Section 7.01. Except as
otherwise provided in Section 7.01:
(a) The Trustee may rely and shall be protected in
acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice,
request, consent, order, approval, bond, security or other
paper or document believed by it to the genuine and to have
been signed or presented by the proper party or parties;
(b) Any request, direction, order or demand of the
Company mentioned herein shall be sufficiently evidenced by a
Board Resolution or an instrument signed in the name of the
Company by the President or any Vice President and by the
Secretary or an Assistant Secretary or the Treasurer or an
Assistant Treasurer (unless other evidence in respect thereof
is specifically prescribed herein);
(c) The Trustee may consult with counsel of its
selection and the written advice of such counsel or any
Opinion of Counsel shall be full and complete authorization
and protection in respect of any action taken or suffered or
omitted hereunder in good faith and in reliance thereon;
(d) The Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this
Indenture at the request, order or direction of any of the
Debentureholders, pursuant to the provisions of this
Indenture, unless such Debentureholders shall have offered to
the Trustee reasonable security or indemnity against the
costs, expenses and liabilities which may be incurred therein
or thereby; nothing herein contained shall, however, relieve
the Trustee of the obligation, upon the occurrence of an Event
of Default with respect to a series of the Debentures (which
has not been cured or waived) to exercise with respect to
Debentures of that series such of the rights and powers vested
in it by this Indenture, and to use the same degree of care
and skill in their exercise, as a prudent man would exercise
or use under the circumstances in the conduct of his own
affairs;
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(e) The Trustee shall not be liable for any action
taken or omitted to be taken by it in good faith and believed
by it to be authorized or within the discretion or rights or
powers conferred upon it by this Indenture;
(f) The Trustee shall not be bound to make any
investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion,
report, notice, request, consent, order, approval, bond,
security, or other papers or documents, unless requested in
writing so to do by the holders of not less than a majority in
principal amount of the outstanding Debentures of the
particular series affected thereby (determined as provided in
Section 8.04); provided, however, that if the payment within a
reasonable time to the Trustee of the costs, expenses or
liabilities likely to be incurred by it in the making of such
investigation is, in the opinion of the Trustee, not
reasonably assured to the Trustee by the security afforded to
it by the terms of this Indenture, the Trustee may require
reasonable indemnity against such costs, expenses or
liabilities as a condition to so proceeding. The reasonable
expense of every such examination shall be paid by the Company
or, if paid by the Trustee, shall be repaid by the Company
upon demand; and
(g) The Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either
directly or by or through agents or attorneys and the Trustee
shall not be responsible for any misconduct or negligence on
the part of any agent or attorney appointed with due care by
it hereunder.
SECTION 7.03. Trustee Not Liable for Recitals In Indenture Or In
Debentures. (a) The recitals contained herein and in the Debentures (other than
the Certificate of Authentication on the Debentures) shall be taken as the
statements of the Company, and the Trustee assumes no responsibility for the
correctness of the same.
(b) The Trustee makes no representations as to the validity or
sufficiency of this Indenture or of the Debentures.
(c) The Trustee shall not be accountable for the use or application by
the Company of any of the Debentures or of the proceeds of such Debentures, or
for the use or application of any moneys paid over by the Trustee in accordance
with any provision of this Indenture or established pursuant to Section 2.01, or
for the use or application of any moneys received by any paying agent other than
the Trustee.
SECTION 7.04. Trustee, Paying Agent or Debenture Registrar May Own
Debentures. The Trustee or any paying agent or Debenture Registrar, in its
individual or
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any other capacity, may become the owner or pledgee of Debentures with the same
rights it would have if it were not Trustee, paying agent or Debenture
Registrar.
SECTION 7.05. Moneys Received by Trustee to Be Held In Trust Without
Interest. Subject to the provisions of Section 11.04, all moneys received by the
Trustee shall, until used or applied as herein provided, be held in trust for
the purposes for which they were received, but need not be segregated from other
funds except to the extent required by law. The Trustee shall be under no
liability for interest on any moneys received by it hereunder except such as it
may agree with the Company to pay thereon.
SECTION 7.06. Trustee Entitled to Compensation, Reimbursement and
Indemnity. (a) The Company covenants and agrees to pay to the Trustee from time
to time, and the Trustee shall be entitled to, such reasonable compensation as
the Company and the Trustee shall from time to time agree in writing (which
shall not be limited by any provision of law in regard to the compensation of a
trustee of an express trust) for all services rendered by it in the execution of
the trusts hereby created and in the exercise and performance of any of the
powers and duties hereunder of the Trustee, and the Company will pay or
reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in accordance with
any of the provisions of this Indenture (including the reasonable compensation
and the expenses and disbursements of its counsel and of all persons not
regularly in its employ) except any such expense, disbursement or advance as may
arise from its negligence or bad faith. The Company also covenants to indemnify
the Trustee (and its officers, agents, directors and employees) for, and to hold
it harmless against, any loss, liability or expense including taxes (other than
taxes based upon, measured by or determined by the income of the Trustee)
incurred without negligence or bad faith on the part of the Trustee and arising
out of or in connection with the acceptance or administration of this trust,
including the costs and expenses of defending itself against any claim of
liability in the premises.
(b) The obligations of the Company under this Section to compensate and
indemnify the Trustee and to pay or reimburse the Trustee for expenses,
disbursements and advances shall constitute additional indebtedness hereunder.
Such additional indebtedness shall be secured by a lien prior to that of the
Debentures upon all property and funds held or collected by the Trustee as such,
except funds held in trust for the benefit of the holders of particular
Debentures.
SECTION 7.07. Right of Trustee to Rely on Certificate of Officers of
Company Where No Other Evidence Specifically Prescribed. Except as otherwise
provided in Section 7.01, whenever in the administration of the provisions of
this Indenture the Trustee shall deem it necessary or desirable that a matter be
proved or established prior to taking or suffering or omitting to take any
action hereunder, such matter (unless other evidence in respect thereof be
herein specifically prescribed) may, in the absence of negligence or bad faith
on the part of the Trustee, be deemed to be conclusively proved
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and established by an Officers' Certificate delivered to the Trustee and such
certificate, in the absence of negligence or bad faith on the part of the
Trustee, shall be full warrant to the Trustee for any action taken, suffered or
omitted to be taken by it under the provisions of this Indenture upon the faith
thereof.
SECTION 7.08. Trustee Acquiring Conflicting Interest to Eliminate
Conflict or Resign. (a) If the Trustee has or shall acquire any conflicting
interest, as defined in this Section, with respect to the Debentures of any
series and if the Default to which such conflicting interest relates has not
been cured, duly waived or otherwise eliminated, within 90 days after
ascertaining that it has such conflicting interest, it shall either eliminate
such conflicting interest, except as otherwise provided herein, or resign with
respect to the Debentures of that series in the manner and with the effect
specified in Section 7.10 and the Company shall promptly appoint a successor
Trustee in the manner provided herein.
(b) In the event that the Trustee shall fail to comply with the
provisions of subsection (a) of this Section, with respect to the Debentures of
any series the Trustee shall, within ten days after the expiration of such
90-day period, transmit notice of such failure by mail, first class postage
prepaid, to the Debentureholders of that series as their names and addresses
appear upon the registration books.
(c) For the purposes of this Section the Trustee shall be deemed to
have a conflicting interest with respect to the Debentures of any series if a
Default has occurred and is continuing and:
(1) the Trustee is trustee under this Indenture with respect
to the outstanding Debentures of any series other than that
series, or is trustee under another indenture under which any
other securities, or certificates of interest or participation
in any other securities, of the Company are outstanding,
unless such other indenture is a collateral trust indenture
under which the only collateral consists of Debentures issued
under this Indenture; provided that there shall be excluded
from the operation of this paragraph the Debentures of any
series other than that series and any other indenture or
indentures under which other securities, or certificates of
interest or participation in other securities, of the Company
are outstanding if (i) this Indenture and such other indenture
or indentures and all series of securities issuable thereunder
are wholly unsecured and rank equally and such other indenture
or indentures (and such series) are hereafter qualified under
the Trust Indenture Act, unless the Commission shall have
found and declared by order pursuant to subsection (b) of
Section 305 or subsection (c) of Section 307 of the Trust
Indenture Act, that differences exist between (A) the
provisions of this Indenture with respect to Debentures of
that series and with respect to one or more other series or
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(B) the provisions of this Indenture and the provisions of
such other indenture or indentures (or such series), which are
so likely to involve a material conflict of interest as to
make it necessary in the public interest or for the protection
of investors to disqualify the Trustee from acting as such
under this Indenture with respect to the Debentures of that
series and such other series or such other indenture or
indentures, or (ii) the Company shall have sustained the
burden of proving, on application to the Commission and after
opportunity for hearing thereon, that the trusteeship under
this Indenture with respect to Debentures of that series and
such other series or such other indenture or indentures is not
so likely to involve a material conflict of interest as to
make it necessary in the public interest or for the protection
of investors to disqualify the Trustee from acting as such
under this Indenture with respect to Debentures of that series
and such other series or under such other indentures;
(2) the Trustee or any of its directors or executive officers
is an underwriter for the Company;
(3) the Trustee directly or indirectly controls or is directly
or indirectly controlled by or is under direct or indirect
common control with or an underwriter for the Company;
(4) the Trustee or any of its directors or executive officers
is a director, officer, partner, employee, appointee or
representative of the Company, or of an underwriter (other
than the Trustee itself) for the Company who is currently
engaged in the business of underwriting, except that (A) one
individual may be a director and/or an executive officer of
the Trustee and a director and/or an executive officer of the
Company, but may not be at the same time an executive officer
of both the Trustee and the Company; (B) if and so long as the
number of directors of the Trustee in office is more than
nine, one additional individual may be a director and/or an
executive officer of the Trustee and a director of the
Company; and (C) the Trustee may be designated by the Company
or by an underwriter for the Company to act in the capacity of
transfer agent, registrar, custodian, paying agent, fiscal
agent, escrow agent, or depository, or in any other similar
capacity, or, subject to the provisions of paragraph (1) of
this subsection (c), to act as trustee whether under an
indenture or otherwise;
(5) 10% or more of the voting securities of the Trustee is
beneficially owned either by the Company or by any director,
partner, or executive officer thereof, or 20% or more of such
voting securities is beneficially owned, collectively, by any
two or more of such persons; or 10% or more of the voting
securities of the Trustee is beneficially owned either by an
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underwriter for the Company or by any director, partner, or
executive officer thereof, or is beneficially owned,
collectively by any two or more such persons;
(6) the Trustee is the beneficial owner of, or holds as
collateral security for an obligation which is in default (as
hereinafter in this subsection (c) defined), (A) 5% or more of
the voting securities, or 10% or more of any other class of
security, of the Company, not including the Debentures issued
under this Indenture and securities issued under any other
indenture under which the Trustee is also trustee, or (B) 10%
or more of any class of security of an underwriter for the
Company;
(7) the Trustee is the beneficial owner of, or holds as
collateral security for an obligation which is in default (as
hereinafter in this subsection (c) defined), 5% or more of the
voting securities of any person who, to the knowledge of the
Trustee, owns 10% or more of the voting securities of, or
controls directly or indirectly or is under direct or indirect
common control with, the Company;
(8) the Trustee is the beneficial owner of, or holds as
collateral security for an obligation which is in default (as
hereinafter in this subsection (c) defined), 10% or more of
any class of security of any person who, to the knowledge of
the Trustee, owns 50% or more of the voting securities of the
Company;
(9) the Trustee owns, on the date of Default upon the
Debentures of any series or any anniversary of such Default
while such Default upon the Debentures issued under this
Indenture remains outstanding, in the capacity of executor,
administrator, testamentary or inter vivos trustee, guardian,
committee or conservator, or in any other similar capacity, an
aggregate of 25% or more of the voting securities, or of any
class of security, of any person, the beneficial ownership of
a specified percentage of which would have constituted a
conflict of interest under paragraph (6), (7), or (8) of this
subsection (c). As to any such securities of which the Trustee
acquired ownership through becoming executor, administrator or
testamentary trustee of an estate which includes them, the
provisions of the preceding sentence shall not apply, for a
period of two years from the date of such acquisition, to the
extent that such securities in such estate do not exceed 25%
of such voting securities or 25% of any such class of
security. Promptly after the dates of any such Default upon
the Debentures issued under this Indenture and annually in
each succeeding year that the Debentures issued under this
Indenture remain in Default, the Trustee shall make a check of
its holding of such securities in any of the above-
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mentioned capacities as of such dates. If the Company fails to
make payment in full of principal of or interest on any of the
Debentures when and as the same becomes due and payable, and
such failure continues for 30 days thereafter, the Trustee
shall make a prompt check of its holding of such securities in
any of the above-mentioned capacities as of the date of the
expiration of such 30-day period, and after such date,
notwithstanding the foregoing provisions of this paragraph
(9), all such securities so held by the Trustee, with sole or
joint control over such securities vested in it, shall, but
only so long as such failure shall continue, be considered as
though beneficially owned by the Trustee for the purposes of
paragraphs (6), (7) and (8) of this subsection (c); or
(10) except under the circumstances described in paragraph
(1), (3), (4), (5) or (6) of subsection (b) of Section 7.13
the Trustee shall be or shall become a creditor of the
Company.
For purposes of paragraph (1) of this subsection (c), and of Section
6.06, the term "series of securities" or "securities" means a series, class or
group of securities issuable under an indenture pursuant to whose terms holders
of one such series may vote to direct the indenture trustee, or otherwise take
action pursuant to a vote of such holders, separately from holders of another
such series; provided, that, "series of securities" or "series" shall not
include any series of securities issuable under an indenture if all such series
rank equally and are wholly secured.
The specification of percentages in paragraphs (5) to (9), inclusive,
of this subsection (c) shall not be construed as indicating that the ownership
of such percentages of securities of a person is or is not necessary or
sufficient to constitute direct or indirect control for the purposes of
paragraph (3) or (7) of this subsection (c).
For the purposes of paragraphs (6), (7), (8) and (9) of this subsection
(c) only, (A) the terms "security" and "securities" shall include only such
securities as are generally known as corporate securities, but shall not include
any note or other evidence of indebtedness issued to evidence an obligation to
repay moneys lent to a person by one or more banks, trust companies or banking
firms, or any certificate of interest or participation in any such note or
evidence of indebtedness; (B) an obligation shall be deemed to be in "default",
when a default in payment of principal shall have continued for 30 days or more
and shall not have been cured; and (C) the Trustee shall not be deemed to be the
owner or holder of (i) any security which it holds as collateral security (as
trustee or otherwise) for any obligation which is not in default as defined in
clause (B) above, or (ii) any security which it holds as collateral security
under this Indenture, irrespective of any Default hereunder, or (iii) any
security which it holds as agent for collection, or as custodian, escrow agent
or depositary, or in any similar representative capacity.
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Except as above provided, the word "security" or securities" as used in
this Indenture shall mean any note, stock, treasury stock, bond, debenture,
evidence of indebtedness, certificate of interest or participation in any
profit-sharing agreement, collateral trust certificate, pre-organization
certificate or subscription, transferable share, investment contract, voting
trust certificate, certificate of deposit for a security, fractional undivided
interest in oil, gas, or other mineral rights, or, in general, any interest or
instrument commonly known as a "security", or any certificate of interest or
participation in, temporary or interim certificate for, receipt for, guarantee
of, or warrant or right to subscribe to or purchase, any of the foregoing.
(d) For the purposes of this Section:
(1) The term "underwriter" when used with reference to the
Company shall mean every person, who, within one year prior to
the time as of which the determination is made, has purchased
from the Company with a view to, or has offered or sold for
the Company in connection with, the distribution of any
security of the Company, or has participated or has had a
direct or indirect participation in any such undertaking, or
has participated or has had a participation in the direct or
indirect underwriting of any such undertaking, but such term
shall not include a person whose interest was limited to a
commission from an underwriter or dealer not in excess of the
usual and customary distributors' or sellers' commission.
(2) The term "director" shall mean any member of the board of
directors of a corporation or any individual performing
similar functions with respect to any organization whether
incorporated or unincorporated.
(3) The term "person" shall mean an individual, a corporation,
a partnership, an association, a joint-stock company, a trust,
an unincorporated organization or a government or political
subdivision thereof. As used in this paragraph, the term
"trust" shall include only a trust where the interest or
interests of the beneficiary or beneficiaries are evidenced by
a security.
(4) The term "voting security" shall mean any security
presently entitling the owner or holder thereof to vote in the
direction or management of the affairs of a person, or any
security issued under or pursuant to any trust, agreement or
arrangement whereby a trustee or trustees or agent or agents
for the owner or holder of such security are presently
entitled to vote in the direction or management of the affairs
of a person.
(5) The term "Company" shall mean any obligor upon the
Debentures.
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(6) The term "executive officer" shall mean the chairman of
the board of directors, president, every vice president, every
assistant vice president, every trust officer, the cashier,
the secretary, and the treasurer of a corporation, and any
individual customarily performing similar functions with
respect to any organization whether incorporated or
unincorporated.
(e) The percentages of voting securities and other securities specified
in this Section shall be calculated in accordance with the following provisions:
(1) A specified percentage of the voting securities of the
Trustee, the Company or any other person referred to in this
Section (each of whom is referred to as a "person" in this
paragraph) means such amount of the outstanding voting
securities of such person as entitles the holder or holders
thereof to cast such specified percentage of the aggregate
votes which the holders of all the outstanding voting
securities of such person are entitled to cast in the
direction or management of the affairs of such person.
(2) A specified percentage of a class of securities of a
person means such percentage of the aggregate amount of
securities of the class outstanding.
(3) The term "amount", when used in regard to securities,
means the principal amount if relating to evidences of
indebtedness, the number of shares if relating to capital
shares and the number of units if relating to any other kind
of security.
(4) The term "outstanding" means issued and not held by or for
the account of the issuer. The following securities shall not
be deemed outstanding within the meaning of this definition:
(i) securities of an issuer held in a sinking fund
relating to securities of the issuer of the same
class;
(ii) securities of an issuer held in a sinking fund
relating to another class of securities of the
issuer, if the obligation evidenced by such other
class of securities is not in default as to principal
or interest or otherwise;
(iii) securities pledged by the issuer thereof as
security for an obligation of the issuer not in
default as to principal or interest or otherwise; and
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(iv) securities held in escrow if placed in escrow by
the issuer thereof, provided, however, that any
voting securities of an issuer shall be deemed
outstanding if any person other than the issuer is
entitled to exercise the voting rights thereof.
(5) A security shall be deemed to be of the same class as
another security if both securities confer upon the holder or
holders thereof substantially the same rights and privileges;
provided, however, that, in the case of secured evidences of
indebtedness, all of which are issued under a single
indenture, differences in the interest rates or maturity dates
of various series thereof shall not be deemed sufficient to
constitute such series different classes; and provided,
further, that, in the case of unsecured evidences of
indebtedness, differences in the interest rates or maturity
dates thereof shall not be deemed sufficient to constitute
them securities of different classes, whether or not they are
issued under a single indenture.
(f) Except in the case of a default in the payment of the principal of
(or premium, if any) or interest on any Debentures issued under this Indenture,
or in the payment of any sinking or analogous fund installment, the Trustee
shall not be required to resign as provided by this Section 7.08 if such Trustee
shall have sustained the burden of proving, on application to the Commission and
after opportunity for hearing thereon, that (i) the default under the Indenture
may be cured or waived during a reasonable period and under the procedures
described in such application and (ii) a stay of the Trustee's duty to resign
will not be inconsistent with the interests of Debentureholders. The filing of
such an application shall automatically stay the performance of the duty to
resign until the Commission orders otherwise.
Any resignation of the Trustee shall become effective only upon the
appointment of a successor trustee and such successor's acceptance of such an
appointment.
SECTION 7.09. Requirements for Eligibility of Trustee. There shall at
all times be a Trustee with respect to the Debentures issued hereunder which
shall at all times be a corporation organized and doing business under the laws
of the United States of America or any State or Territory thereof or of the
District of Columbia, or a corporation or other person permitted to act as
trustee by the Commission, authorized under such laws to exercise corporate
trust powers, having a combined capital and surplus of at least 50 million
dollars, and subject to supervision or examination by Federal, State,
Territorial, or District of Columbia authority. If such corporation publishes
reports of condition at least annually, pursuant to law or to the requirements
of the aforesaid supervising or examining authority, then for the purposes of
this Section, the combined capital and surplus of such corporation shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. The Company may not, nor may any person
directly or indirectly controlling, controlled by, or under common control with
the
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Company, serve as Trustee. In case at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section, the Trustee shall
resign immediately in the manner and with the effect specified in Section 7.10.
SECTION 7.10. Resignation of Trustee and Appointment of Successor. (a)
The Trustee or any successor hereafter appointed, may at any time resign with
respect to the Debentures of one or more series by giving written notice thereof
to the Company and by transmitting notice of resignation by mail, first class
postage prepaid, to the Debentureholders of such series, as their names and
addresses appear upon the Debenture Register. Upon receiving such notice of
resignation, the Company shall promptly appoint a successor trustee with respect
to Debentures of such series by written instrument, in duplicate, executed by
order of the Board of Directors, one copy of which instrument shall be delivered
to the resigning Trustee and one copy to the successor trustee. If no successor
trustee shall have been so appointed and have accepted appointment within 30
days after the mailing of such notice of resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a successor
trustee with respect to Debentures of such series, or any Debentureholder of
that series who has been a bona fide holder of a Debenture or Debentures for at
least six months may, subject to the provisions of Section 6.08, on behalf of
himself and all others similarly situated, petition any such court for the
appointment of a successor trustee. Such court may thereupon after such notice,
if any, as it may deem proper and prescribe, appoint a successor trustee.
(b) In case at any time any of the following shall occur:
(1) the Trustee shall fail to comply with the provisions of
subsection (a) of Section 7.08 after written request therefor
by the Company or by any Debentureholder who has been a bona
fide holder of a Debenture or Debentures for at least six
months; or
(2) the Trustee shall cease to be eligible in accordance with
the provisions of Section 7.09 and shall fail to resign after
written request therefor by the Company or by any such
Debentureholder; or
(3) the Trustee shall become incapable of acting, or shall be
adjudged bankrupt or insolvent, or a receiver of the Trustee
or of its property shall be appointed, or any public officer
shall take charge or control of the Trustee or of its property
or affairs for the purpose of rehabilitation, conservation or
liquidation,
then, in any such case, the Company may remove the Trustee with respect to all
Debentures and appoint a successor trustee by written instrument, in duplicate,
executed by order of the Board of Directors, one copy of which instrument shall
be delivered to the Trustee so removed and one copy to the successor trustee. If
no successor trustee shall
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have been so appointed and have accepted appointment within 30 days after the
mailing of such notice of removal, the Trustee so removed may petition any court
of competent jurisdiction for the appointment of a successor trustee with
respect to Debentures of such series, or any Debentureholder of that series who
has been a bona fide holder of a Debenture or Debentures for at least six months
may, subject to the provisions of Section 6.08, on behalf of himself and all
others similarly situated, petition any such court for the removal of the
Trustee and the appointment of a successor trustee. Such court may thereupon
after such notice, if any, as it may deem proper and prescribe, remove the
Trustee and appoint a successor trustee.
(c) The holders of a majority in aggregate principal amount of the
Debentures of any series at the time outstanding may at any time remove the
Trustee with respect to such series and appoint a successor trustee.
(d) Any resignation or removal of the Trustee and appointment of a
successor trustee with respect to the Debentures of a series pursuant to any of
the provisions of this Section shall become effective upon acceptance of
appointment by the successor trustee as provided in Section 7.11.
(e) Any successor trustee appointed pursuant to this Section may be
appointed with respect to the Debentures of one or more series or all of such
series, and at any time there shall be only one Trustee with respect to the
Debentures of any particular series.
SECTION 7.11. Acceptance by Successor to Trustee. (a) In case of the
appointment hereunder of a successor trustee with respect to all Debentures,
every such successor trustee so appointed shall execute, acknowledge and deliver
to the Company and to the retiring Trustee an instrument accepting such
appointment, and thereupon the resignation or removal of the retiring Trustee
shall become effective and such successor trustee, without any further act, deed
or conveyance, shall become vested with all the rights, powers, trusts and
duties of the retiring Trustee; but, on the request of the Company or the
successor trustee, such retiring Trustee shall, upon payment of its charges,
execute and deliver an instrument transferring to such successor trustee all the
rights, powers, and trusts of the retiring Trustee and shall duly assign,
transfer and deliver to such successor trustee all property and money held by
such retiring Trustee hereunder.
(b) In case of the appointment hereunder of a successor trustee with
respect to the Debentures of one or more (but not all) series, the Company, the
retiring Trustee and each successor trustee with respect to the Debentures of
one or more series shall execute and deliver an indenture supplemental hereto
wherein each successor trustee shall accept such appointment and which shall (1)
contain such provisions as shall be necessary or desirable to transfer and
confirm to, and to vest in, each successor trustee all the rights, powers,
trusts and duties of the retiring Trustee with respect to the Debentures of that
or those series to which the appointment of such successor trustee relates, (2)
contain such
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provisions as shall be deemed necessary or desirable to confirm that all the
rights, powers, trusts and duties of the retiring Trustee with respect to the
Debentures of that or those series as to which the retiring Trustee is not
retiring shall continue to be vested in the retiring Trustee, and (3) add to or
change any of the provisions of this Indenture as shall be necessary to provide
for or facilitate the administration of the trusts hereunder by more than one
Trustee, it being understood that nothing herein or in such supplemental
indenture shall constitute such Trustees co-trustees of the same trust, that
each such Trustee shall be trustee of a trust or trusts hereunder separate and
apart from any trust or trusts hereunder administered by any other such Trustee
and that no Trustee shall be responsible for any act or failure to act on the
part of any other Trustee hereunder; and upon the execution and delivery of such
supplemental indenture the resignation or removal of the retiring Trustee shall
become effective to the extent provided therein, such retiring Trustee shall
with respect to the Debentures of that or those series to which the appointment
of such successor trustee relates have no further responsibility for the
exercise of rights and powers or for the performance of the duties and
obligations vested in the Trustee under this Indenture, and each such successor
trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, trusts and duties of the retiring Trustee with respect
to the Debentures of that or those series to which the appointment of such
successor trustee relates; but, on request of the Company or any successor
Trustee, such retiring Trustee shall duly assign, transfer and deliver to such
successor trustee, to the extent contemplated by such supplemental indenture,
the property and money held by such retiring Trustee hereunder with respect to
the Debentures of that or those series to which the appointment of such
successor trustee relates.
(c) Upon request of any such successor trustee, the Company shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor trustee all such rights, power and trusts referred
to in paragraph (a) or (b) of this Section, as the case may be.
(d) No successor trustee shall accept its appointment unless at the
time of such acceptance such successor trustee shall be qualified and eligible
under this Article.
(e) Upon acceptance of appointment by a successor trustee as provided
in this Section, the Company shall transmit notice of the succession of such
trustee hereunder by mail, first class postage prepaid, to the Debentureholders,
as their names and addresses appear upon the Debenture Register. If the Company
fails to transmit such notice within ten days after acceptance of appointment by
the successor trustee, the successor trustee shall cause such notice to be
transmitted at the expense of the Company.
SECTION 7.12. Successor to Trustee by Merger, Consolidation or
Succession to Business. Any corporation into which the Trustee may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion
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or consolidation to which the Trustee shall be a party, or any corporation
succeeding to substantially all of the corporate trust business of the Trustee,
shall be the successor of the Trustee hereunder, provided such corporation shall
be qualified under the provisions of Section 7.08 and eligible under the
provisions of Section 7.09, without the execution or filing of any paper or any
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding. In case any Debentures shall have been authenticated,
but not made available for delivery, by the Trustee then in office, any
successor by merger, conversion or consolidation to such authenticating Trustee
may adopt such authentication and make available for delivery the Debentures so
authenticated with the same effect as if such successor Trustee had itself
authenticated such Debentures.
SECTION 7.13. Limitations on Rights of Trustee as a Creditor to Obtain
Payment of Certain Claims Within Four Months Prior to Default or During Default,
or to Realize on Property as such Creditor Thereafter. (a) Subject to the
provisions of subsection (b) of this Section, if the Trustee shall be or shall
become a creditor, directly or indirectly, secured or unsecured, of the Company
within three months prior to a default, as defined in subsection (b) of this
Section, or subsequent to such a default, then, unless and until such default
shall be cured, the Trustee shall set apart and hold in a special account for
the benefit of the Trustee individually, the holders of the Debentures and the
holders of other indenture securities (as defined in subsection (c) of this
Section):
(1) an amount equal to any and all reductions in the amount
due and owing upon any claim as such creditor in respect of
principal or interest, effected after the beginning of such
three months' period and valid as against the Company and its
other creditors, except any such reduction resulting from the
receipt or disposition of any property described in paragraph
(2) of this subsection, or from the exercise of any right of
set-off which the Trustee could have exercised if a petition
in bankruptcy had been filed by or against the Company upon
the date of such default; and
(2) all property received by the Trustee in respect of any
claim as such creditor, either as security therefor, or in
satisfaction or composition thereof, or otherwise, after the
beginning of such three months' period, or an amount equal to
the proceeds of any such property, if disposed of, subject,
however, to the rights, if any, of the Company and its other
creditors in such property or such proceeds.
Nothing herein contained, however, shall affect the right of the
Trustee:
(A) to retain for its own account (i) payments made on account
of any such claim by any person (other than the Company) who
is liable thereon, and (ii) the proceeds of the bona fide sale
of any such claim by the Trustee
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to a third person, and (iii) distributions made in cash,
securities, or other property in respect of claims filed
against the Company in bankruptcy or receivership or in a case
for reorganization pursuant to the Federal Bankruptcy Code or
applicable State law;
(B) to realize, for its own account, upon any property held by
it as security for any such claim, if such property was so
held prior to the beginning of such three months' period;
(C) to realize, for its own account, but only to the extent of
the claim hereinafter mentioned, upon any property held by it
as security for any such claim, if such claim was created
after the beginning of such three months' period and such
property was received as security therefor simultaneously with
the creation thereof, and if the Trustee shall sustain the
burden of proving that at the time such property was so
received the Trustee had no reasonable cause to believe that a
default, as defined in subsection (c) of this Section, would
occur within three months; or
(D) to receive payment on any claim referred to in paragraph
(B) or (C), against the release of any property held as
security for such claim as provided in such paragraph (B) or
(C), as the case may be, to the extent of the fair value of
such property.
For the purposes of paragraphs (B), (C) and (D), property substituted
after the beginning of such three months' period for property held as security
at the time of such substitution shall, to the extent of the fair value of the
property released, have the same status as the property released, and, to the
extent that any claim referred to in any of such paragraphs is created in
renewal of or in substitution for or for the purpose of repaying or refunding
any pre-existing claim of the Trustee as such creditor, such claim shall have
the same status as such pre-existing claim.
If the Trustee shall be required to account, the funds and property
held in such special account and the proceeds thereof shall be apportioned
between the Trustee, the Debentureholders and the holders of other indenture
securities in such manner that the Trustee, the Debentureholders and the holders
of other indenture securities realize, as a result of payments from such special
account and payments of dividends on claims filed against the Company in
bankruptcy or receivership or in a case for reorganization pursuant to the
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Federal Bankruptcy Code or applicable State law, the same percentage of their
respective claims, figured before crediting to the claim of the Trustee anything
on account of the receipt by it from the Company of the funds and property in
such special account and before crediting to the respective claims of the
Trustee, the Debentureholders and the holders of other indenture securities
dividends on claims filed against the Company in bankruptcy or receivership or
in a case for reorganization pursuant to the Federal Bankruptcy Code or
applicable State law, but after crediting thereon receipts on account of the
indebtedness represented by their respective claims from all sources other than
from such dividends and from the funds and property so held in such special
account. As used in this paragraph, with respect to any claim, the term
"dividends" shall include any distribution with respect to such claim, in
bankruptcy or receivership or in a case for reorganization pursuant to the
Federal Bankruptcy Code or applicable State law, whether such distribution is
made in cash, securities, or other property, but shall not include any such
distribution with respect to the secured portion, if any, of such claim. The
court in which such bankruptcy, receivership or a case for reorganization is
pending shall have jurisdiction (i) to apportion between the Trustee, the
Debentureholders and the holders of other indenture securities, in accordance
with the provisions of this paragraph, the funds and property held in such
special account and the proceeds thereof, or (ii) in lieu of such apportionment,
in whole or in part, to give to the provisions of this paragraph due
consideration in determining the fairness of the distributions to be made to the
Trustee, the Debentureholders and the holders of other indenture securities with
respect to their respective claims, in which event it shall not be necessary to
liquidate or to appraise the value of any securities or other property held in
such special account or as security for any such claim, or to make a specific
allocation of such distributions as between the secured and unsecured portions
of such claims, or otherwise to apply the provisions of this paragraph as a
mathematical formula.
Any Trustee who has resigned or been removed after the beginning of
such three months' period shall be subject to the provisions of this subsection
(a) as though such resignation or removal had not occurred. If any Trustee has
resigned or been removed prior to the beginning of such three months' period, it
shall be subject to the provisions of this subsection (a) if and only if the
following conditions exist:
(i) the receipt of property or reduction of claim which would
have given rise to the obligation to account, if such Trustee
had continued as trustee, occurred after the beginning of such
three months' period; and
(ii) such receipt of property or reduction of claim occurred
within three months after such resignation or removal.
(b) There shall be excluded from the operation of subsection (a) of
this Section a creditor relationship arising from:
(1) the ownership or acquisition of securities issued under
any indenture, or any security or securities having a maturity
of one year or more at the time of acquisition by the Trustee;
(2) advances authorized by a receivership or bankruptcy court
of competent jurisdiction, or by this Indenture, for the
purpose of preserving
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any property other than cash which shall at any time be
subject to the lien, if any, of this Indenture or of
discharging tax liens or other prior liens or encumbrances
thereon, if notice of such advance and of the circumstances
surrounding the making thereof is given to the
Debentureholders at the time and in the manner provided in
this Indenture;
(3) disbursements made in the ordinary course of business in
the capacity of trustee under an indenture, transfer agent,
registrar, custodian, paying agent, subscription agent, fiscal
agent or depositary, or other similar capacity;
(4) an indebtedness created as a result of services rendered
or premises rented; or an indebtedness created as a result of
goods or securities sold in a cash transaction as defined in
subsection (c) of this Section;
(5) the ownership of stock or of other securities of a Company
organized under the provisions of Section 25(a) of the Federal
Reserve Act, as amended, which is directly or indirectly a
creditor of the Company; or
(6) the acquisition, ownership, acceptance or negotiation of
any drafts, bills of exchange, acceptance or obligations which
fall within the classification of self-liquidating paper as
defined in subsection (c) of this Section.
(c) As used in this Section:
(1) The term "default" shall mean any failure to make payment
in full of the principal of (or premium, if any) or interest
upon any of the Debenture or upon the other indenture
securities when and as such principal (or premium, if any) or
interest becomes due and payable.
(2) Th e term "other indenture securities" shall mean
securities upon which the Company is an obligor (as defined in
the Trust Indenture Act) outstanding under any other indenture
(A) under which the Trustee is also trustee, (B) which
contains provisions substantially similar to the provisions of
subsection (a) of this Section, and (C) under which a default
exists at the time of the apportionment of the funds and
property held in said special account.
(3) The term "cash transaction" shall mean any transaction in
which full payment for goods or securities sold is made within
seven days after delivery of the goods or securities in
currency or in checks or other orders drawn upon banks or
bankers and payable upon demand.
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(4) The term "self-liquidating paper" shall mean any draft,
bill of exchange, acceptance or obligation which is made,
drawn, negotiated or incurred by the Company for the purpose
of financing the purchase, processing, manufacture, shipment,
storage or sale of goods, wares or merchandise and which is
secured by documents evidencing title to, possession of, or a
lien upon , the goods, wares or merchandise or the receivables
or proceeds arising from the sale of the goods, wares or
merchandise previously constituting the security, provided the
security is received by the Trustee simultaneously with the
creation of the creditor relationship with the Company arising
from the making, drawing, negotiating or incurring of the
draft, bill of exchange, acceptance or obligation.
(5) The term "Company" shall mean any obligor upon any of the
Debentures.
ARTICLE 8
CONCERNING THE DEBENTURES
SECTION 8.01. Evidence of Action by Debentureholders. Whenever in this
Indenture it is provided that the holders of a majority or specified percentage
in aggregate principal amount of the Debentures of a particular series may take
any action (including the making of any demand or request, the giving of any
notice, consent or waiver or the taking of any other action) the fact that at
the time of taking any such action the holders of such majority or specified
percentage of that series have joined therein may be evidenced by any instrument
or any number of instruments of similar tenor executed by such holders of
Debentures of that series in person or by agent or proxy appointed in writing.
If the Company shall solicit from the Debentureholders of any series
any request, demand, authorization, direction, notice, consent, waiver or other
action, the Company may, at its option, as evidenced by an Officers'
Certificate, fix in advance a record date for such series for the determination
of Debentureholders entitled to give such request, demand, authorization,
direction, notice, consent, waiver or other action, but the Company shall have
no obligation to do so. If such a record date is fixed, such request, demand,
authorization, direction, notice, consent, waiver or other action may be given
before or after the record date, but only the Debentureholders of record at the
close of business on the record date shall be deemed to be Debentureholders for
the purposes of determining whether Debentureholders of the requisite proportion
of outstanding Debentures of that series have authorized or agreed or consented
to such request, demand, authorization, direction, notice, consent, waiver or
other action, and for that purpose the outstanding Debentures of that series
shall be computed as of the record date; provided
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that no such authorization, agreement or consent by such Debentureholders on the
record date shall be deemed effective unless it shall become effective pursuant
to the provisions of this Indenture not later than six months after the record
date.
SECTION 8.02. Proof of Execution of Instruments and of Holding of
Debentures. Subject to the provisions of Section 7.01, proof of the execution of
any instrument by a Debentureholder (such proof will not require notarization)
or his agent or proxy and proof of the holding by any person of any of the
Debentures shall be sufficient if made in the following manner;
(a) The fact and date of the execution by any such person of
any instrument may be proved in any reasonable manner
acceptable to the Trustee.
(b) The ownership of Debentures shall be proved by the
Debenture Register of such Debentures or by a certificate of
the Debenture Registrar thereof.
(c) The Trustee may require such additional proof of any
matter referred to in this Section as it shall deem necessary.
SECTION 8.03. Who May Be Deemed Owners of Debentures. Prior to the due
presentment for registration of transfer of any Debenture, the Company, the
Trustee, any paying agent and any Debenture Registrar may deem and treat the
person in whose name such Debenture shall be registered upon the books of the
Company as the absolute owner of such Debenture (whether or not such Debenture
shall be overdue and notwithstanding any notice of ownership or writing thereon
made by anyone other than the Debenture Registrar) for the purpose of receiving
payment of or on account of the principal of, premium, if any, and (subject to
Section 2.03) interest on such Debenture and for all other purposes; and neither
the Company nor the Trustee nor any paying agent nor any Debenture Registrar
shall be affected by any notice to the contrary.
SECTION 8.04. Debentures Owned by a Company or Controlled or
Controlling Companies Disregarded for Certain Purposes. In determining whether
the holders of the requisite aggregate principal amount of Debentures of a
particular series have concurred in any direction, consent or waiver under this
Indenture, Debentures of that series which are owned by the Company or any other
obligor on the Debentures of that series or by any Subsidiary of the Company or
of such other obligor on the Debentures of that series shall be disregarded and
deemed not to be outstanding for the purpose of any such determination, except
that for the purpose of determining whether the Trustee shall be protected in
relying on any such direction, consent or waiver, only Debentures of such series
which the Trustee actually knows are so owned shall be so disregarded.
Debentures so owned which have been pledged in good faith may be regarded as
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outstanding for the purposes of this Section, if the pledgee shall establish to
the satisfaction of the Trustee the pledgee's right so to act with respect to
such Debentures and that the pledgee is not a person directly or indirectly
controlling or controlled by or under direct or indirect common control with the
Company or any such other obligor. In case of a dispute as to such right, any
decision by the Trustee taken upon the advice of counsel shall be full
protection to the Trustee.
SECTION 8.05. Instruments Executed by Debentureholders Bind Future
Holders. At any time prior to (but not after) the evidencing to the Trustee, as
provided in Section 8.01, of the taking of any action by the holders of the
majority or percentage in aggregate principal amount of the Debentures of a
particular series specified in this Indenture in connection with such action,
any holder of a Debenture of that series which is shown by the evidence to be
included in the Debentures the holders of which have consented to such action
may, by filing written notice with the Trustee, and upon proof of holding as
provided in Section 8.02, revoke such action so far as concerns such Debenture.
Except as aforesaid any such action taken by the holder of any Debenture shall
be conclusive and binding upon such holder and upon all future holders and
owners of such Debenture, and of any Debenture issued in exchange therefor, on
registration of transfer thereof or in place thereof, irrespective of whether or
not any notation in regard thereto is made upon such Debenture. Any action taken
by the holders of the majority or percentage in aggregate principal amount of
the Debentures of a particular series specified in this Indenture in connection
with such action shall be conclusively binding upon the Company, the Trustee and
the holders of all the Debentures of that series.
ARTICLE 9
SUPPLEMENTAL INDENTURES
SECTION 9.01. Purposes for Which Supplemental Indenture May Be Entered
Into Without Consent of Debentureholders. In addition to any supplemental
indenture otherwise authorized by this Indenture, the Company, when authorized
by a Board Resolution, and the Trustee may from time to time and at any time
enter into an indenture or indentures supplemental hereto (which shall conform
to the provisions of the Trust Indenture Act as then in effect), without the
consent of the Debentureholders, for one or more of the following purposes:
(a) to evidence the succession of another corporation to the
Company, and the assumption by any such successor of the
covenants of the Company contained herein or otherwise
established with respect to the Debentures; or
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(b) to add to the covenants of the Company such further
covenants, restrictions, conditions or provisions for the
protection of the holders of the Debentures of all or any
series as the Board of Directors and the Trustee shall
consider to be for the protection of the holders of Debentures
of all or any series, and to make the occurrence, or the
occurrence and continuance, of a default in any of such
additional covenants, restrictions, conditions or provisions a
default or an Event of Default with respect to such series
permitting the enforcement of all or any of the several
remedies provided in this Indenture as herein set forth;
provided, however, that in respect of any such additional
covenant, restriction, condition or provision such
supplemental indenture may provide for a particular period of
grace after default (which period may be shorter or longer
than that allowed in the case of other defaults) or may
provide for an immediate enforcement upon such default or may
limit the remedies available to the Trustee upon such default
or may limit the right of the holders of a majority in
aggregate principal amount of the Debentures of such series to
waive such default; or
(c) to cure any ambiguity or to correct or supplement any
provision contained herein or in any supplemental indenture
which may be defective or inconsistent with any other
provision contained herein or in any supplemental indenture,
or to make such other provisions in regard to matters or
questions arising under this Indenture as shall not be
inconsistent with the provisions of this Indenture and shall
not adversely affect the interests of the holders of the
Debentures of any series; or
(d) to change or eliminate any of the provisions of this
Indenture, provided that any such change or elimination shall
become effective only when there is no Debenture outstanding
of any series created prior to the execution of such
supplemental indenture which is entitled to the benefit of
such provision.
The Trustee is hereby authorized to join with the Company in the
execution of any such supplemental indenture, and to make any further
appropriate agreements and stipulations which may be therein contained, but the
Trustee shall not be obligated to enter into any such supplemental indenture
which affects the Trustee's own rights, duties or immunities under this
Indenture or otherwise.
Any supplemental indenture authorized by the provisions of this Section
may be executed by the Company and the Trustee without the consent of the
holders of any of the Debentures at the time outstanding, notwithstanding any of
the provisions of Section 9.02.
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SECTION 9.02. Modification of Indenture with Consent of
Debentureholders. With the consent (evidenced as provided in Section 8.01) of
the holders of not less than a majority in aggregate principal amount of the
Debentures of each series affected by such supplemental indenture or indentures
at the time outstanding (and, in the case of any series of Debentures held as
trust assets of an AES Trust and with respect to which a Security Exchange has
not theretofore occurred, such consent of holders of the Preferred Securities
and the Common Securities of such AES Trust as may be required under the
Declaration of Trust of such AES Trust), the Company, when authorized by a Board
Resolution, and the Trustee may from time to time and at any time enter into an
indenture or indentures supplemental hereto (which shall conform to the
provisions of the Trust Indenture Act as then in effect) for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or of any supplemental indenture or of modifying in
any manner the rights of the holders of the Debentures of such series under this
Indenture; provided, however, that no such supplemental indenture shall (i)
extend the fixed maturity of any Debentures of any series, or reduce the
principal amount thereof, or reduce the rate or extend the time of payment of
interest thereon, or reduce any premium payable upon the redemption thereof,
without the consent of the holder of each Debenture so affected or (ii) reduce
the aforesaid percentage of Debentures, the holders of which are required to
consent to any such supplemental indenture, without the consent of the holders
of each Debenture (and, in the case of any series of Debentures held as trust
assets of an AES Trust and with respect to which a Security Exchange has not
theretofore occurred, such consent of the holders of the Preferred Securities
and the Common Securities of such AES Trust as may be required under the
Declaration of Trust of such AES Trust) then outstanding and affected thereby.
Upon the request of the Company, accompanied by a Board Resolution
authorizing the execution of any such supplemental indenture, and upon the
filing with the Trustee of evidence of the consent of Debentureholders (and, in
the case of any series of Debentures held as trust assets of an AES Trust and
with respect to which a Security Exchange has not theretofore occurred, such
consent of holders of the Preferred Securities and the Common Securities of such
AES Trust as may be required under the Declaration of Trust of such AES Trust)
required to consent thereto as aforesaid, the Trustee shall join with the
Company in the execution of such supplemental indenture unless such supplemental
indenture affects the Trustee's own rights, duties or immunities under this
Indenture or otherwise, in which case the Trustee may in its discretion but
shall not be obligated to enter into such supplemental indenture.
It shall not be necessary for the consent of the Debentureholders of
any series affected thereby under this Section to approve the particular form of
any proposed supplemental indenture, but it shall be sufficient if such consent
shall approve the substance thereof.
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Promptly after the execution by the Company and the Trustee of any
supplemental indenture pursuant to the provisions of this Section, the Trustee
shall transmit by mail, first class postage prepaid, a notice, setting forth in
general terms the substance of such supplemental indenture, to the
Debentureholders of all series affected thereby as their names and addresses
appear upon the Debenture Register. Any failure of the Trustee to mail such
notice, or any defect therein, shall not, however, in any way impair or affect
the validity of any such supplemental indenture.
SECTION 9.03. Effect of Supplemental Indentures. Upon the execution of
any supplemental indenture pursuant to the provisions of this Article or of
Section 10.01, this Indenture shall, with respect to such series, be and be
deemed to be modified and amended in accordance therewith and the respective
rights, limitations of rights, obligations, duties and immunities under this
Indenture of the Trustee, the Company and the holders of Debentures of the
series affected thereby shall thereafter be determined, exercised and enforced
hereunder subject in all respects to such modifications and amendments, and all
the terms and conditions of any such supplemental indenture shall be and be
deemed to be part of the terms and conditions of this Indenture for any and all
purposes.
SECTION 9.04. Debentures May Bear Notation of Changes By Supplemental
Indentures. Debentures of any series, affected by a supplemental indenture,
authenticated and delivered after the execution of such supplemental indenture
pursuant to the provisions of this Article or of Section 10.01, may bear a
notation in form approved by the Company, provided such form meets the
requirements of any exchange upon which such series may be listed, as to any
matter provided for in such supplemental indenture. If the Company shall so
determine, new Debentures of that series so modified as to conform, in the
opinion of the Board of Directors, to any modification of this Indenture
contained in any such supplemental indenture may be prepared by the Company,
authenticated by the Trustee and delivered in exchange for the Debentures of
that series then outstanding.
SECTION 9.05. Opinion of Counsel. The Trustee, subject to the
provisions of Section 7.01, may receive an Opinion of Counsel as conclusive
evidence that any supplemental indenture executed pursuant to this Article is
authorized or permitted by, and conforms to, the terms of this Article and that
it is proper for the Trustee under the provisions of this Article to join in the
execution thereof.
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ARTICLE 10
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
SECTION 10.01. Satisfaction and Discharge of Indenture. The Company
shall not consolidate with or merge into any other Person or transfer or lease
its properties and assets substantially as an entirety to any Person, and the
Company shall not permit any other Person to consolidate with or merge into the
Company, unless:
(a) either the Company shall be the continuing
corporation, or the corporation (if other than the Company)
formed by such consolidation or into which the Company is
merged or to which the properties and assets of the Company
substantially as an entity are transferred or leased shall be
a corporation organized and existing under the laws of the
United States of America or any State thereof or the District
of Columbia and shall expressly assume, by an indenture
supplemental hereto, executed and delivered to the Trustee, in
form satisfactory to the Trustee, all the obligations of the
Company under the Debentures and this Indenture; and
(b) immediately after giving effect to such
transaction no Event of Default, and no event which, after
notice or lapse of time or both, would become an Event of
Default, shall have occurred and be continuing.
SECTION 10.02. Successor Corporation Substituted. The successor
corporation formed by such consolidation or into which the Company is merged or
to which such transfer or lease is made shall succeed to and be substituted for,
and may exercise every right and power of, the Company under this Indenture with
the same effect as if such successor corporation had been named as the Company
herein, and thereafter (except in the case of a lease to another Person) the
predecessor corporation shall be relieved of all obligations and covenants under
the Indenture and the Debentures and, in the event of such conveyance or
transfer, any such predecessor corporation may be dissolved and liquidated.
SECTION 10.03. Opinion of Counsel. The Trustee, subject to the
provisions of Section 7.01, may receive an Opinion of Counsel as conclusive
evidence that any such consolidation, merger, sale, conveyance, transfer or
other disposition, and any such assumption, comply with the provisions of this
Article.
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ARTICLE 11
SATISFACTION AND DISCHARGE OF INDENTURE; UNCLAIMED MONEYS
SECTION 11.01. Satisfaction and Discharge of Indentures. (A) If at any
time (a) the Company shall have paid or caused to be paid the principal of and
interest on all the Debentures of any series Outstanding hereunder (other than
Debentures of such series which have been destroyed, lost or stolen and which
have been replaced or paid as provided in Section 2.07) as and when the same
shall have become due and payable, or (b) the Company shall have delivered to
the Trustee for cancellation all Debentures of any series theretofore
authenticated (other than any Debentures of such series which shall have been
destroyed, lost or stolen and which shall have been replaced or paid as provided
in Section 2.07) or (c) (i) all the Debentures of series not theretofore
delivered to the Trustee for cancellation shall have become due and payable, or
are by their terms to become due and payable within one year or are to be called
for redemption within one year under arrangements satisfactory to the Trustee
for the giving of notice of redemption, and (ii) the Company shall have
irrevocably deposited or caused to be deposited with the Trustee as trust funds
the entire amount in cash (other than moneys repaid by the Trustee or any paying
agent to the Company in accordance with Section 11.04) or Government
Obligations, maturing as to principal and interest at such times and in such
amounts as will insure the availability of cash, or a combination thereof,
sufficient in the opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to the
Trustee, to pay (A) the principal and interest on all Debentures of such series
on each date that such principal or interest is due and payable and (B) any
mandatory sinking fund payments on the dates on which such payments are due and
payable in accordance with the terms of the Indenture and the Debentures of such
series; and if, in any such case, the Company shall also pay or cause to be paid
all other sums payable hereunder by the Company, then this Indenture shall cease
to be of further effect (except as to (i) rights of registration of transfer and
exchange of Debentures of such series and the Company's right of optional
redemption, if any, (ii) substitution of mutilated, defaced, destroyed, lost or
stolen Debentures, (iii) rights of holders of Debentures to receive payments of
principal thereof and interest thereon, upon the original stated due dates
therefor (but not upon acceleration), and remaining rights of the
Debentureholders to receive mandatory sinking fund payments, if any, (iv) the
rights, obligations, duties and immunities of the Trustee hereunder, (v) the
rights of the holders of Debentures of such series as beneficiaries hereof with
respect to the property so deposited with the Trustee payable to all or any of
them, and (vi) the obligations of the Company under Section 4.02) and the
Trustee, on demand of the Company accompanied by an Officers' Certificate and an
Opinion of Counsel and at the cost and expense of the Company, shall execute
proper instruments acknowledging such satisfaction of and discharging this
Indenture; provided, that the rights of Holders of the Debentures to receive
amounts in respect of principal of and interest on the Debentures held by them
shall not be delayed longer than required by then-applicable mandatory rules or
policies of any securities exchange upon which the Debentures are listed. The
Company agrees to
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reimburse the Trustee for any costs or expenses thereafter reasonably and
properly incurred and to compensate the Trustee for any services thereafter
reasonably and properly rendered by the Trustee in connection with this
Indenture or the Debentures of such series.
(B) The following provisions shall apply to the Debentures of each
series unless specifically otherwise provided in a Board Resolution or indenture
supplemental hereto provided pursuant to Section 2.01. In addition to discharge
of the Indenture pursuant to the next preceding paragraph, the Company shall be
deemed to have paid and discharged the entire indebtedness on all the Debentures
of a series on the date of the deposit referred to in subparagraph (a) below,
and the provisions of this Indenture with respect to the Debentures of such
series shall no longer be in effect (except as to (i) rights of registration of
transfer and exchange of Debentures of such series and the Company's right of
optional redemption, if any, (ii) substitution of mutilated, defaced, destroyed,
lost or stolen Debentures, (iii) rights of holders of Debentures to receive
payments of principal thereof and interest thereon, upon the original stated due
dates therefor (but not upon acceleration), and remaining rights of the holders
of Debentures to receive mandatory sinking fund payments, if any, (iv) the
rights, obligations, duties and immunities of the Trustee hereunder, (v) the
rights of the Holders of Debentures as beneficiaries hereof with respect to the
property so deposited with the Trustee payable to all or any of them and (vi)
the obligations of the Company under Section 4.02) and the Trustee, at the
expense of the Company, shall at the Company's request, execute proper
instruments acknowledging the same, if
(a) with reference to this provision the Company has
irrevocably deposited or caused to be irrevocably deposited
with the Trustee as trust funds in trust, specifically pledged
as security for, and dedicated solely to, the benefit of the
holders of the Debentures of such series (i) cash in an
amount, or (ii) Governmental Obligations maturing as to
principal and interest at such times and in such amounts as
will insure the availability of cash or (iii) a combination
thereof, sufficient, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee, to pay (A) the
principal and interest on all Debentures of such series on
each date that such principal or interest is due and payable
or is earlier redeemed (irrevocably provided for under
arrangements satisfactory to the Trustee), as the case may be,
and (B) any mandatory sinking fund payments on the dates on
which such payments are due and payable in accordance with the
terms of the Indenture and the Debentures of such series;
(b) such deposit will not result in a breach or violation of,
or constitute a default under, any agreement or instrument to
which the Company is a party or by which it is bound;
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(c) the Company has delivered to the Trustee an Opinion of
Counsel based on the fact that (x) the Company has received
from, or there has been published by, the Internal Revenue
Service a ruling or (y) since the date hereof, there has been
a change in the applicable Federal income tax law, in either
case to the effect that, and such opinion shall confirm that,
the holders of the Debentures of such series will not
recognize income, gain or loss for Federal income tax purposes
as a result of such deposit, defeasance and discharge and will
be subject to Federal income tax on the same amount and in the
same manner and at the same times, as would have been the case
if such deposit, defeasance and discharge had not occurred;
(d) the Company has delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel, each stating that all
conditions precedent provided for relating to the defeasance
contemplated by this provision have been complied with; and
(e) no event or condition shall exist that, pursuant to the
provisions of Section 14.02 or 14.03, would prevent the
Company from making payments of the principal of or interest
on the Debentures of such series on the date of such deposit.
SECTION 11.02. Application of Trustee of Funds Deposited For Payment of
Debentures. Subject to Section 11.04, all moneys deposited with the Trustee (or
other trustee) pursuant to Section 11.01 shall be held in trust and applied by
it to the payment, either directly or through any paying agent (including the
Company acting as its own paying agent), to the Holders of the particular
Debentures of such series for the payment or redemption of which such moneys
have been deposited with the Trustee, of all sums due and to become due thereon
for principal and interest; but such money need not be segregated from other
funds except to the extent required by law.
SECTION 11.03. Application by Trustee of Funds Deposited For Payment of
Debentures. In connection with the satisfaction and discharge of this Indenture
with respect to Debentures of any series, all moneys then held by any paying
agent under the provisions of this Indenture with respect to such series of
Debentures shall, upon demand of the Company, be repaid to it or paid to the
Trustee and thereupon such paying agent shall be released from all further
liability with respect to such moneys.
SECTION 11.04. Repayment of Moneys Held by Paying Agent. Any moneys
deposited with or paid to the Trustee or any paying agent for the payment of the
principal of or interest on any Security of any series and not applied but
remaining unclaimed for two years after the date upon which such principal or
interest shall have become due and payable, shall, upon the written request of
the Company and unless otherwise required by
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mandatory provisions of applicable escheat or abandoned or unclaimed property
law, be repaid to the Company by the Trustee for such series or such paying
agent, and the Holder of the Debentures of such series shall, unless otherwise
required by mandatory provisions of applicable escheat or abandoned or unclaimed
property laws, thereafter look only to the Company for any payment which such
holder may be entitled to collect, and all liability of the Trustee or any
paying agent with respect to such moneys shall thereupon cease; provided,
however, that the Trustee or such paying agent, before being required to make
any such repayment with respect to moneys deposited with it for any payment
series, shall at the expense of the Company, mail by first-class mail to holders
of such Debentures at their addresses as they shall appear on the Debenture
Register, notice, that such moneys remain and that, after a date specified
therein, which shall not be less than thirty days from the date of such mailing
or publication, any unclaimed balance of such money then remaining will be
repaid to the Company.
SECTION 11.05. Repayment of Moneys Paid by Trustee. The Company shall
pay and indemnify the Trustee against any tax, fee or other charge imposed on or
assessed against the Governmental Obligations deposited pursuant to Section
11.01 or the principal or interest received in respect of such obligations.
ARTICLE 12
IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS
SECTION 12.01. Incorporators, Stockholders, Officers and Directors of
Company Exempt From Individual Liability. No recourse under or upon any
obligations, covenant or agreement of this Indenture, or of any Debenture, or
for any claim based thereon or otherwise in respect thereof, shall be had
against any incorporator, stockholder, officer or director, past, present or
future as such, of the Company or of any predecessor or successor corporation,
either directly or through the Company or any such predecessor or successor
corporation, whether by virtue of any constitution, statue or rule of law, or by
the enforcement of any assessment or penalty or otherwise; it being expressly
understood that this Indenture and the obligations issued hereunder are solely
corporate obligations, and that no such personal liability whatever shall attach
to, or is or shall be incurred by, the incorporators, stockholders, officers or
directors as such, of the Company or of any predecessor or successor
corporation, or any of them, because of the creation of the indebtedness hereby
authorized, or under or by reason of the obligations, covenants or agreements
contained in this Indenture or in any of the Debentures or implied therefrom;
and that any and all such personal liability of every name and nature, either at
common law or in equity or by constitution or statute, of, and any and all such
rights and claims against, every such incorporator, stockholder, officer or
director as such, because the creation of the indebtedness hereby authorized, or
under or by reason of the obligations, covenants or agreements contained in this
Indenture or in any of the Debentures or
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implied therefrom, are hereby expressly waived and released as a condition of,
and as a consideration for, the execution of this Indenture and the issuance of
such Debentures.
ARTICLE 13
MISCELLANEOUS PROVISIONS
SECTION 13.01. Successors and Assigns of Company Bound by Indenture.
All the covenants, stipulations, promises and agreements in this Indenture
contained by or on behalf of the Company shall bind its successors and assigns,
whether so expressed or not.
SECTION 13.02. Acts of Board, Committee or Officer of Successor Company
Valid. Any act or proceeding by any provision of this Indenture authorized or
required to be done or performed by any board, committee or officer of the
Company shall and may be done and performed with like force and effect by the
corresponding board, committee or officer of any corporation that shall at the
time be the lawful sole successor of the Company.
SECTION 13.03. Surrender of Powers of Company. The Company by
instrument in writing executed by authority of two-thirds of its Board of
Directors and delivered to the Trustee may surrender any of the powers reserved
to the Company and thereupon such power so surrendered shall terminate both as
to the Company and as to any successor corporation.
SECTION 13.04. Required Notices or Demands May be Served by Mail.
Except as otherwise expressly provided herein any notice or demand which by any
provision of this Indenture is required or permitted to be given or served by
the Trustee or by the holders of Debentures to or on the Company may be given or
served by being deposited first class postage prepaid in a post-office letterbox
addressed (until another address is filed in writing by the Company with the
Trustee), as follows: The AES Corporation, 1001 North 19th Street, Arlington,
Virginia 22209, Attention: General Counsel and Secretary. Any notice, election,
request or demand by the Company or any Debentureholder to or upon the Trustee
shall be deemed to have been sufficiently given or made, for all purposes, if
given or made in writing at the Corporate Trust Office of the Trustee.
SECTION 13.05. Indenture and Debentures to Be Construed in Accordance
with Laws of the State of New York. This Indenture and each Debenture shall be
deemed to be a contract made under the laws of the State of New York, and for
all purposes shall be construed in accordance with the laws of said State
(without regard to principles of conflicts of laws thereof).
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SECTION 13.06. Officer's Certificate and Opinion of Counsel to be
Furnished Upon Application or Demands by Company; Statements To Be Included In
Each Certificate or Opinion With Respect to Compliance With Condition or
Covenant. (a) Upon any application or demand by the Company to the Trustee to
take any action under any of the provisions of this Indenture, the Company shall
furnish to the Trustee an Officers' Certificate stating that all conditions
precedent provided for in this Indenture relating to the proposed action have
been complied with and an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent have been complied with, except that in
the case of any such application or demand as to which the furnishing of such
documents is specifically required by any provision of this Indenture relating
to such particular application or demand, no additional certificate or opinion
need be furnished.
(b) Each certificate or opinion provided for in this Indenture and
delivered to the Trustee with respect to compliance with a condition or covenant
in this Indenture (other than the certificate provided pursuant to Section
5.03(d) of this Indenture) shall include (1) a statement that the person making
such certificate or opinion has read such covenant or condition; (2) a brief
statement as to the nature and scope of the examination or investigation upon
which the statements or opinions contained in such certificate or opinion are
based; (3) a statement that, in the opinion of such person, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and (4) a statement as to whether or not, in the opinion of such
person, such condition or covenant has been complied with.
SECTION 13.07. Payments Due on Sundays or Holidays. Except as provided
pursuant to Section 2.01 pursuant to a Board Resolution, and as set forth in an
Officers' Certificate, or established in one or more indentures supplemental to
the Indenture, in any case where the date of maturity of interest or principal
of any Debenture or the date of redemption of any Debenture shall not be a
business day then payment of interest or principal (and premium, if any) may be
made on the next succeeding business day with the same force and effect as if
made on the nominal date of maturity or redemption, and no interest shall accrue
for the period after such nominal date.
SECTION 13.08. Provisions Required by Trust Indenture Act of 1939 to
Control. If and to the extent that any provision of this Indenture limits,
qualifies or conflicts with the duties imposed by Sections 310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall control.
SECTION 13.09. Indenture May Be Executed by its Counterparts. This
Indenture may be executed in any number of counterparts, each of which shall be
an original; but such counterparts shall together constitute but one and the
same instrument.
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SECTION 13.10. Separability of Indenture Provisions. .In case any one
or more of the provisions contained in this Indenture or in the Debentures of
any series shall for any reason be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not affect
any other provisions of this Indenture or of such Debentures, but this Indenture
and such Debentures shall be construed as if such invalid or illegal or
unenforceable provision had never been contained herein or therein.
SECTION 13.11. Assignment by Company to Subsidiary. The Company will
have the right at all times to assign any of its rights or obligations under
this Indenture to a direct or indirect wholly owned Subsidiary of the Company;
provided that, in the event of any such assignment, the Company will remain
jointly and severally liable for all such obligations. Subject to the foregoing,
this Indenture is binding upon and inures to the benefit of the parties thereto
and their respective successors and assigns. This Indenture may not otherwise be
assigned by the parties hereto.
SECTION 13.12. Holders of Preferred Securities as Third Party
Beneficiaries of the Indenture; Holders of Preferred Securities May Institute
Legal Proceedings Against the Company in Certain Cases. The Company hereby
acknowledges that, to the extent specifically set forth herein, prior to a
Security Exchange with respect to the Debentures of any series held as trust
assets of a AES Trust, the holders of the Preferred Securities of such AES Trust
shall expressly be third party beneficiaries of this Indenture. The Company
further acknowledges that, prior to a Security Exchange with respect to
Debentures of any series held as trust assets of a AES Trust, if the Property
Trustee of such AES Trust fails to enforce its rights under this Indenture as
the holder of the Debentures of a series held as trust assets of such AES Trust,
any holder of the Preferred Securities of such AES Trust may institute legal
proceedings directly against the Company to enforce such Property Trustee's
rights under this Indenture without first instituting any legal proceedings
against such Property Trustee or any other person or entity; provided that, if
an Event of Default has occurred and is continuing and such event is attributed
to the failure of the Company to pay interest or principal on the Debentures on
the date such interest or principal is otherwise payable (or in the case of
redemption, on the redemption date), then a holder of Preferred Securities of
such AES Trust may directly institute a proceeding for enforcement of payment to
such holder of the principal of or interest on the Debentures having a principal
amount equal to the aggregate liquidation amount of the Preferred Securities of
such holder (a "Holder Direct Action") on or after the respective due date
specified in the Debentures. In connection with such Holder Direct Action, the
rights of the holders of the Common Securities of such AES Trust will be
subrogated to the rights of such holder of Preferred Securities to the extent of
any payment made by the Company to such holders of Preferred Securities in such
Holder Direct Action. Except as provided in the preceding sentences, the holders
of Preferred Securities of such AES Trust will not be able to exercise directly
any other remedy available to the holders of the Debentures. Reference to a
"holder" of Preferred
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Securities or Common Securities herein shall mean a "Holder" of such securities
as defined in the Declaration of Trust.
ARTICLE 14
SUBORDINATION OF DEBENTURES
SECTION 14.01. Agreement to Subordinate. The Company covenants and
agrees, and each Debentureholder issued hereunder by his acceptance thereof
likewise covenants and agrees, that all Debentures shall be issued subject to
the provisions of this Article; and each person holding any Debenture, whether
upon original issue or upon transfer, assignment or exchange thereof accepts and
agrees that the Principal of and interest on all Debentures issued hereunder
shall, to the extent and in the manner herein set forth, be subordinated and
subject in right to the prior payment in full of all Senior and Subordinated
Debt.
SECTION 14.02. Payments to Debentureholders. No payments on account of
principal of, premium, if any, or interest on the Debentures shall be made if at
the time of such payment or immediately after giving effect thereto there shall
exist a default in any payment with respect to any Senior and Subordinated Debt,
and such event of default shall not have been cured or waived or shall not have
ceased to exist. In addition, during the continuance of any other event of
default (other than a payment default) with respect to Designated Senior and
Subordinated Debt pursuant to which the maturity thereof may be accelerated,
from and after the date of receipt by the Trustee of written notice from the
holders of such Designated Senior and Subordinated Debt or from an agent of such
holders, no payments on account of principal, premium, if any, or interest in
respect of the Debentures may be made by the Company for a period ("Payment
Blockage Period") commencing on the date of delivery of such notice and ending
179 days thereafter (unless such Payment Blockage Period shall be terminated by
written notice to the Trustee from the holders of such Designated Senior and
Subordinated Debt or from an agent of such holders, or such event of default has
been cured or waived or has ceased to exist). Only one Payment Blockage Period
may be commenced with respect to the Debentures during any period of 360
consecutive days. No event of default which existed or was continuing on the
date of the commencement of any Payment Blockage Period with respect to the
Designated Senior and Subordinated Debt initiating such Payment Blockage Period
shall be or be made the basis for the commencement of any subsequent Payment
Blockage Period by the holders of such Designated Senior and Subordinated Debt,
unless such event of default shall have been cured or waived for a period of not
less than 90 consecutive days.
Upon any payment or distribution of assets of the Company of any kind
or character, whether in cash, property or securities, to creditors upon any
liquidation,
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dissolution, winding up, receivership, reorganization, assignment for the
benefit of creditors, marshalling of assets and liabilities or any bankruptcy,
insolvency or similar proceedings of the Company, all amounts due or to become
due upon all Senior and Subordinated Debt shall first be paid in full, in cash
or cash equivalents, or payment thereof provided for in accordance with its
terms, before any payment is made on account of the principal of, premium, if
any, or interest on the indebtedness evidenced by the Debentures, and upon any
such liquidation, dissolution, winding up, receivership, reorganization,
assignment, marshalling or proceeding, any payment or distribution of assets of
the Company of any kind or character, whether in cash, property or securities,
to which the Debentureholders or the Trustee under this Indenture would be
entitled, except for the provisions hereof, shall be paid by the Company or by
any receiver, trustee in bankruptcy, liquidating trustee, agent or other Person
making such payment or distribution, or by the Debentureholders or by the
Trustee under this Indenture if received by them or it, directly to the holders
of Senior and Subordinated Debt (pro rata to such holders on the basis of the
respective amounts of Senior and Subordinated Debt held by such holders) or
their respective representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing any of such Senior and
Subordinated Debt may have been issued, as their respective interests may
appear, to the extent necessary to pay all Senior and Subordinated Debt in full
(including, without limitation, except to the extent, if any, prohibited by
mandatory provisions of law, post-petition interest, in any such proceedings),
after giving effect to any concurrent payment or distribution to or for the
holders of Senior and Subordinated Debt, before any payment or distribution is
made to the holders of the indebtedness evidenced by the Debentures or to the
Trustee under this Indenture.
In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities, prohibited by the foregoing, shall be received by the
Trustee under this Indenture or the holders of the Debentures before all Senior
and Subordinated Debt is paid in full or provision is made for such payment in
accordance with its terms, such payment or distribution shall be held in trust
for the benefit of and shall be paid over or delivered to the holders of such
Senior and Subordinated Debt or their respective representatives, or to the
trustee or trustees under any indenture pursuant to which any instruments
evidencing any of such Senior and Subordinated Debt may have been issued, as
their respective interests may appear, for application to the payment of all
Senior and Subordinated Debt remaining unpaid until all such Senior and
Subordinated Debt shall have been paid in full in accordance with its terms,
after giving effect to any concurrent payment or distribution to or for the
holders of such Senior and Subordinated Debt.
For purposes of this Article, the words, "cash, property or securities"
shall not be deemed to include shares of stock of the Company as reorganized or
readjusted, or securities of the Company or any other corporation provided for
by a plan of arrangement, reorganization or readjustment, the payment of which
is subordinated (at least to the
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extent provided in this Article with respect to the Debentures) to the payment
of all Senior and Subordinated Debt which may at the time be outstanding;
provided, that (i) the Senior and Subordinated Debt is assumed by the new
corporation, if any, resulting from any such arrangement, reorganization or
readjustment, and (ii) the rights of the holders of the Senior and Subordinated
Debt are not, without the consent of such holders, altered by such arrangement,
reorganization or readjustment. The consolidation of the Company with, or the
merger of the Company into, another corporation or the liquidation or
dissolution of the Company following the conveyance or transfer of its property
as an entirety, or substantially as an entirety, to another corporation upon the
terms and conditions provided in Article 10 shall not be deemed a dissolution,
winding-up, liquidation or reorganization for the purposes of this Section if
such other corporation shall, as a part of such consolidation, merger,
conveyance or transfer, comply with the conditions stated in Article 10. Nothing
in this Section shall apply to claims of, or payments to, the Trustee under or
pursuant to Article 7, except as provided therein. This Section shall be subject
to the further provisions of Section 14.05.
SECTION 14.03. Subrogation of Debentures. Subject to the payment in
full of all Senior and Subordinated Debt, the holders of the Debentures shall be
subrogated to the rights of the holders of Senior and Subordinated Debt to
receive payments or distributions of cash, property or securities of the Company
applicable to the Senior and Subordinated Debt until the principal of and
interest on the Debentures shall be paid in full; and, for the purposes of such
subrogation, no payments or distributions to the holders of the Senior and
Subordinated Debt of any cash, property or securities to which the holders of
the Debentures or the Trustee on their behalf would be entitled except for the
provisions of this Article, and no payment over pursuant to the provisions of
this Article to the holders of Senior and Subordinated Debt by holders of the
Debentures or the Trustee on their behalf shall, as between the Company, its
creditors other than holders of Senior and Subordinated Debt and the holders of
the Debentures, be deemed to be a payment by the Company to or on account of the
Senior and Subordinated Debt; and no payments or distributions of cash, property
or securities to or for the benefit of the Debentureholders pursuant to the
subrogation provision of this Article, which would otherwise have been paid to
the holders of Senior and Subordinated Debt shall be deemed to be a payment by
the Company to or for the account of the Debentures. It is understood that the
provisions of this Article are and are intended solely for the purpose of
defining the relative rights of the holders of the Debentures, on the one hand,
and the holders of the Senior and Subordinated Debt, on the other hand.
Nothing contained in this Article or elsewhere in this Indenture or in
the Debentures is intended to or shall impair, as between the Company, its
creditors other than the holders of Senior and Subordinated Debt, and the
holders of the Debentures, the obligation of the Company, which is absolute and
unconditional, to pay to the holders of the Debentures the principal of and
interest on the Debentures as and when the same shall become due and payable in
accordance with their terms, or is intended to or shall affect
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the relative rights of the holders of the Debentures and creditors of the
Company other than the holders of the Senior and Subordinated Debt, nor shall
anything herein or therein prevent the holder of any Debenture or the Trustee on
his behalf from exercising all remedies otherwise permitted by applicable law
upon default under this Indenture, subject to the rights, if any, under this
Article of the holders of Senior and Subordinated Debt in respect of cash,
property or securities of the Company received upon the exercise of any such
remedy.
Upon any payment or distribution of assets of the Company referred to
in this Article, the Trustee, subject to the provisions of Article 7, and the
holders of the Debentures shall be entitled to rely upon any order or decree
made by any court of competent jurisdiction in which such liquidation,
dissolution, winding up, receivership, reorganization, assignment or marshalling
proceedings are pending, or a certificate of the receiver, trustee in
bankruptcy, liquidating trustee, agent or other person making such payment or
distribution, delivered to the Trustee or to the holders of the Debentures, for
the purpose of ascertaining the persons entitled to participate in such
distribution, the holders of the Senior and Subordinated Debt and other
indebtedness of the Company, the amount thereof or payable thereon, the amount
or amounts paid or distributed thereon and all other facts pertinent thereto or
to this Article.
SECTION 14.04. Authorization by Debentureholders. Each holder of a
Debenture by his acceptance thereof authorizes the Trustee in his behalf to take
such action as may be necessary or appropriate to effectuate the subordination
provided in this Article and appoints the Trustee his attorney-in-fact for any
and all such purposes.
SECTION 14.05. Notice to Trustee. The Company shall give prompt written
notice to the Trustee and to any paying agent of any fact known to the Company
which would prohibit the making of any payment of moneys to or by the Trustee or
any paying agent in respect of the Debentures pursuant to the provisions of this
Article. Regardless of anything to the contrary contained in this Article or
elsewhere in this Indenture, the Trustee shall not be charged with knowledge of
the existence of any Senior and Subordinated Debt or of any default or event of
default with respect to any Senior and Subordinated Debt or of any other facts
which would prohibit the making of any payment of moneys to or by the Trustee,
unless and until the Trustee shall have received notice in writing at its
principal Corporate Trust Office to that effect signed by an officer of the
Company, or by a holder or agent of a holder of Senior and Subordinated Debt who
shall have been certified by the Company or otherwise established to the
reasonable satisfaction of the Trustee to be such holder or agent, or by the
trustee under any indenture pursuant to which Senior and Subordinated Debt shall
be outstanding, and, prior to the receipt of any such written notice, the
Trustee shall, subject to the provisions of Article 7, be entitled to assume
that no such facts exist; provided that if on a date at least three Business
days prior to the date upon which by the terms hereof any such moneys shall
become payable for any purpose (including, without limitation, the payment
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of the principal of, or interest on any Debenture) the Trustee shall not have
received with respect to such moneys the notice provided for in this Section,
then, regardless of anything herein to the contrary, the Trustee shall have full
power and authority to receive such moneys and to apply the same to the purpose
for which they were received, and shall not be affected by any notice to the
contrary which may be received by it on or after such prior date.
Regardless of anything to the contrary herein, nothing shall prevent
(a) any payment by the Company or the Trustee to the Debentureholders of amounts
in connection with a redemption of Debentures if (i) notice of such redemption
has been given pursuant to Article 3 prior to the receipt by the Trustee of
written notice as aforesaid, and (ii) such notice of redemption is given not
earlier than 60 days before the redemption date, or (b) any payment by the
Trustee to the Debentureholders of amounts deposited with it pursuant to Article
11.
The Trustee shall be entitled to rely on the delivery to it of a
written notice by a person representing himself to be a holder of Senior and
Subordinated Debt (or a trustee on behalf of such holder) to establish that such
notice has been given by a holder of Senior and Subordinated Debt or a trustee
on behalf of any such holder. In the event that the Trustee determines in good
faith that further evidence is required with respect to the right of any person
as a holder of Senior and Subordinated Debt to participate in any payment or
distribution pursuant to this Article, the Trustee may request such person to
furnish evidence to the reasonable satisfaction of the Trustee as to the amount
of Senior and Subordinated Debt held by such person, the extent to which such
person is entitled to participate in such payment or distribution and any other
facts pertinent to the rights of such person under this Article, and if such
evidence is not furnished the Trustee may defer any payment to such person
pending judicial determination as to the right of such person to receive such
payment.
SECTION 14.06. Trustee's Relation to Senior and Subordinated Debt. The
Trustee and any agent of the Company or the Trustee shall be entitled to all the
rights set forth in this Article with respect to any Senior and Subordinated
Debt which may at any time be held by it in its individual or any other capacity
to the same extent as any other holder of Senior and Subordinated Debt and
nothing in this Indenture shall deprive the Trustee or any such agent, of any of
its rights as such holder. Nothing in this Article shall apply to claims of, or
payments to, the Trustee under or pursuant to Article 7.
With respect to the holders of Senior and Subordinated Debt, the
Trustee undertakes to perform or to observe only such of its covenants and
obligations as are specifically set forth in this Article, and no implied
covenants or obligations with respect to the holders of Senior and Subordinated
Debt shall be read into this Indenture against the Trustee. The Trustee shall
not be deemed to owe any fiduciary duty to the holders of Senior and
Subordinated Debt and, subject to the provisions of Article 7, the Trustee shall
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not be liable to any holder of Senior and Subordinated Debt if it shall pay over
or deliver to holders of Debentures, the Company or any other person moneys or
assets to which any holder of Senior and Subordinated Debt shall be entitled by
virtue of this Article or otherwise.
SECTION 14.07. No Impairment to Subordination. No right of any present
or future holder of any Senior and Subordinated Debt to enforce subordination as
herein provided shall at any time in any way be prejudiced or impaired by any
act or failure to act on the part of the Company or by any act or failure to
act, in good faith, by any such holder, or by any noncompliance by the Company
with the terms, provisions and covenants of this Indenture, regardless of any
knowledge thereof which any such holder may have or otherwise be charged with.
The First National Bank of Chicago, as Trustee, hereby accepts the
trust in this Indenture declared and provided, upon the terms and conditions
herein above set forth.
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
THE AES CORPORATION
By
------------------------------
Name:
Title:
Attest:
By
------------------------
Name:
Title:
THE FIRST NATIONAL BANK OF CHICAGO, AS TRUSTEE
By
---------------------------
Name:
Title:
Attest:
By
----------------------
Name:
Title:
==================================
THE AES CORPORATION
AND
THE FIRST NATIONAL BANK OF CHICAGO
as Trustee
---------------------------
SECOND SUPPLEMENTAL INDENTURE
Dated as of October 29, 1997
TO
JUNIOR SUBORDINATED INDENTURE
Dated as of March 1, 1997
---------------------------
5.50% Junior Subordinated Debentures
Due 2012
==================================
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TABLE OF CONTENTS
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PAGE
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ARTICLE 1
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GENERAL TERMS AND CONDITIONS OF THE SERIES 5.50% DEBENTURES
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SECTION 1.01. .................................................................................3
SECTION 1.02. .................................................................................3
SECTION 1.03. .................................................................................4
SECTION 1.04. .................................................................................6
ARTICLE 2
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OPTIONAL REDEMPTION OF THE SERIES 5.50% DEBENTURES
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SECTION 2.01. ................................................................................11
SECTION 2.02. ................................................................................13
SECTION 2.03. ................................................................................14
ARTICLE 3
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EXTENSION OF INTEREST PAYMENT PERIOD
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SECTION 3.01. ................................................................................14
SECTION 3.02. ................................................................................15
SECTION 3.03. ................................................................................16
ARTICLE 4
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COVENANTS APPLICABLE TO SERIES 5.50% DEBENTURES
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SECTION 4.01. ................................................................................16
SECTION 4.02. ................................................................................16
SECTION 4.03. ................................................................................16
SECTION 4.04. ................................................................................16
ARTICLE 5
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CONVERSION OF DEBENTURES
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SECTION 5.01. ................................................................................17
SECTION 5.02. ................................................................................17
SECTION 5.03. ................................................................................19
SECTION 5.04. ................................................................................28
SECTION 5.05. ................................................................................32
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PAGE
SECTION 5.06. ................................................................................33
SECTION 5.07. ................................................................................34
SECTION 5.08. ................................................................................34
ARTICLE 6
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FORM OF SERIES 5.50% DEBENTURES
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SECTION 6.01. ................................................................................35
ARTICLE 7
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ORIGINAL ISSUE OF SERIES 5.50% DEBENTURES
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SECTION 7.01. ................................................................................54
ARTICLE 8
MISCELLANEOUS PROVISIONS
SECTION 8.01. ................................................................................54
SECTION 8.02. ................................................................................54
SECTION 8.03. ................................................................................54
SECTION 8.04. ................................................................................55
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The Second Supplemental INDENTURE, dated as of the 29th day of October,
1997 (the "SECOND SUPPLEMENTAL INDENTURE"), between THE AES CORPORATION, a
corporation duly organized and existing under the laws of the State of Delaware
(hereinafter sometimes referred to as the "COMPANY") and THE FIRST NATIONAL BANK
OF CHICAGO, a national banking association, as trustee (hereinafter sometimes
referred to as the "TRUSTEE") under the Junior Subordinated Indenture dated as
of March 1, 1997 between the Company and the Trustee (the "INDENTURE") (except
as otherwise set forth herein, all terms used and not defined herein are used as
defined in the Indenture or in the Declaration of Trust);
WHEREAS, the Company executed and delivered the Indenture to the
Trustee to provide for the future issuance of its junior subordinated securities
(the "DEBENTURES"), said Debentures to be issued from time to time in series as
might be determined by the Company under the Indenture, in an unlimited
aggregate principal amount which may be authenticated and delivered thereunder
as in the Indenture provided; and
WHEREAS, pursuant to the terms of the Indenture, the Company desires to
provide for the establishment of a new series of its Debentures to be known as
its 5.50% Junior Subordinated Debentures due 2012 (said series being hereinafter
referred to as the "SERIES 5.50% DEBENTURES"), the form and substance of such
Series 5.50% Debentures and the terms, provisions and conditions thereof to be
set forth as provided in the Indenture and this Second Supplemental Indenture;
and
WHEREAS, the Company has caused to be formed AES Trust II ("AES TRUST
II" or the "TRUST") as a statutory business trust under the Business Trust Act
of the State of Delaware (12 Del. Code ss. 3801 et seq.) pursuant to a
declaration of trust dated November 1, 1996 (the "ORIGINAL DECLARATION") and the
filing of a restated certificate of trust with the Secretary of State of the
State of Delaware on March 27, 1997; and
WHEREAS, the Original Declaration is to be amended and restated in its
entirety pursuant to an Amended and Restated Declaration of Trust dated as of
October 29, 1997 (such Amended and Restated Declaration of Trust, as amended
from time to time, the "DECLARATION OF TRUST"); and
WHEREAS, AES Trust II desires to issue its $2.75 Term Convertible
Securities, Series A (the "PREFERRED SECURITIES" or "TECONS") and sell such
Preferred Securities to initial purchasers; and
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WHEREAS, in connection with such purchases of Preferred Securities and
the related purchase by the Company of the Common Securities (as defined in the
Declaration of Trust) of AES Trust II, AES Trust II will purchase as trust
assets Series 5.50% Debentures; and
WHEREAS, pursuant to the Declaration of Trust, the legal title to the
Series 5.50% Debentures shall be owned and held of record in the name of The
First National Bank of Chicago or its successor under the Declaration of Trust,
as Property Trustee (the "PROPERTY TRUSTEE"), in trust for the benefit of
holders of the Preferred Securities and the Common Securities; and
WHEREAS, upon the occurrence of a Special Event (as defined in the
Declaration of Trust) the Regular Trustees (as defined in the Declaration of
Trust) of AES Trust II shall, unless the Series 5.50% Debentures are redeemed as
described herein, dissolve AES Trust II and cause to be distributed to the
holders of Preferred Securities and Common Securities, on a Pro Rata basis
(determined as provided in the terms of the Preferred Securities and Common
Securities attached as Exhibits B and C to the Declaration of Trust), Series
5.50% Debentures and, in connection with a Liquidation Distribution (as defined
in the Declaration of Trust), the Regular Trustees may cause to be distributed
to holders of Preferred Securities and Common Securities, on such a Pro Rata
basis, Series 5.50% Debentures (each a "DISSOLUTION EVENT"); and
WHEREAS, the Company desires and has requested the Trustee to join with
it in the execution and delivery of this Second Supplemental Indenture, and all
requirements necessary to make this Second Supplemental Indenture a valid
instrument, in accordance with its terms, and to make the Series 5.50%
Debentures when executed by the Company and authenticated and delivered by the
Trustee, the valid obligations of the Company, have been performed and
fulfilled, and the execution and delivery hereof have been in all respects duly
authorized;
NOW THEREFORE, in consideration of the purchase and acceptance of the
Series 5.50% Debentures by the holders thereof, and for the purpose of setting
forth, as provided in the Indenture, the form and substance of the Series 5.50%
Debentures and the terms, provisions and conditions thereof, the Company
covenants and agrees with the Trustee as follows:
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ARTICLE 1
GENERAL TERMS AND CONDITIONS OF THE SERIES 5.50% DEBENTURES
SECTION 1.01. There shall be and is hereby authorized a series of
Debentures designated the "5.50% JUNIOR SUBORDINATED DEBENTURES DUE 2012",
limited in aggregate principal amount to $309,278,400 (except as provided in
this Section 1.01 and 7.01). Upon exercise of the overallotment option set forth
in the Purchase Agreement (as defined in the Declaration of Trust), additional
Series 5.50% Debentures in the aggregate principal amount of up to $46,391,800
may be executed by the Company and delivered to the Trustee for authentication,
and the Trustee shall thereupon authenticate and deliver said Series 5.50%
Debentures to or upon the written order of the Company, which order shall be
accompanied by evidence satisfactory to the Trustee that the overallotment
option has been exercised. The Series 5.50% Debentures shall mature and the
principal shall be due and payable together with all accrued and unpaid interest
thereon, including Compounded Interest (as hereinafter defined) on September 30,
2012 (the "MATURITY DATE").
SECTION 1.02. (a) Except as provided in Section 1.02(b), the Series
5.50% Debentures shall be issued in fully registered certificated form without
interest coupons in denominations of $50 or integral multiples thereof.
Principal and interest on the Series 5.50% Debentures issued in certificated
form will be payable, the transfer of such Series 5.50% Debentures will be
registrable and such Series 5.50% Debentures will be exchangeable for Series
5.50% Debentures bearing identical terms and provisions at the office or agency
of the Company in the Borough of Manhattan, The City and State of New York;
provided, however, that payment of interest may be made at the option of the
Company by check mailed to the registered holder at such address as shall appear
in the Debenture register and that the payment of principal with respect to the
Series 5.50% Debentures will only be made upon surrender of the Series 5.50%
Debentures to the Trustee. Notwithstanding the foregoing, so long as the
Property Trustee is the legal owner and record holder of the Series 5.50%
Debentures, the payment of the principal of and interest (including Compounded
Interest, if any) on the Series 5.50% Debentures held by the Property Trustee
will be made by the Company in immediately available funds on the payment date
therefor at such place and to the Property Account (as defined in the
Declaration of Trust) established and maintained by the Property Trustee
pursuant to the Declaration of Trust.
(b) In connection with a Dissolution Event:
(i) Series 5.50% Debentures in certificated form may be presented
to the Trustee by the Property Trustee in exchange for a Global
Debenture representing the Series 5.50% Debentures in an aggregate
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principal amount equal to all Outstanding Series 5.50% Debentures, to
be registered in the name of the Depositary, or its nominee, and
delivered by the Trustee to the Depositary for crediting to the
accounts of its participants pursuant to the instructions of the
Regular Trustees (as defined in the Declaration of Trust). The Company
upon any such presentation shall execute a Global Debenture
representing the Series 5.50% Debentures in such aggregate principal
amount and deliver the same to the Trustee for authentication and
delivery in accordance with the Indenture and this Second Supplemental
Indenture. Payments on the Series 5.50% Debentures issued as a Global
Debenture will be made to the Depositary; and
(ii) if any Preferred Securities are held in non book-entry
certificated form, Series 5.50% Debentures in certificated form may be
presented to the Trustee by the Property Trustee and any Preferred
Security Certificate (as defined in the Declaration of Trust) which
represents Preferred Securities other than Preferred Securities held by
the Clearing Agency (as defined in the Declaration of Trust) or its
nominee ("NON BOOK-ENTRY PREFERRED SECURITIES") will be deemed to
represent beneficial interests in Series 5.50% Debentures presented to
the Trustee by the Property Trustee having an aggregate principal
amount equal to the aggregate liquidation amount of the Non Book-Entry
Preferred Securities until such Preferred Security Certificate are
presented to the Debenture Registrar for transfer or reissuance at
which time such Preferred Security Certificate will be canceled and a
Series 5.50% Debenture, registered in the name of the holder of the
Preferred Security Certificate or the transferee of the holder of such
Preferred Security Certificate, as the case may be, with an aggregate
principal amount equal to the aggregate liquidation amount of the
Preferred Security Certificate canceled will be executed by the Company
and delivered to the Trustee for authentication and delivery in
accordance with the Indenture and this Second Supplemental Indenture.
On issue of such Series 5.50% Debentures, Series 5.50% Debentures with
an equivalent aggregate amount that were presented by the Property
Trustee to the Trustee will be deemed to have been canceled.
SECTION 1.03. Each Series 5.50% Debenture will bear interest at the
rate of 5.50% per annum from October 29, 1997 until the principal thereof
becomes due and payable, and on any overdue principal and (to the extent that
payment of such interest is enforceable under applicable law) on any overdue
installment of interest at the same rate per annum, compounded quarterly,
payable (subject to the provisions of Article Three) quarterly in arrears on the
last day of each calendar quarter (each an "INTEREST PAYMENT DATE", commencing
on December 31, 1997),
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to the person in whose name such Series 5.50% Debenture or any predecessor
Series 5.50% Debenture is registered, at the close of business on the regular
record date for such interest installment, which, except as set forth below,
shall be, in respect of any Series 5.50% Debentures of which the Property
Trustee is the registered holder of or a Global Debenture, the close of business
on the business day next preceding that Interest Payment Date. Notwithstanding
the foregoing sentence, if the Preferred Securities are no longer in book-entry
only form or if pursuant to the provisions of Section 2.11(c) of the Indenture
the Series 5.50% Debentures are not represented by a Global Debenture, the
regular record dates for such interest installment shall be the close of
business on the fifteenth day of the month in which that Interest Payment Date
occurs. Any such interest installment not punctually paid or duly provided for
shall forthwith cease to be payable to the registered holders on such regular
record date, and may be paid to the person in whose name the Series 5.50%
Debenture (or one or more Predecessor Debentures) is registered at the close of
business on a special record date to be fixed by the Trustee for the payment of
such defaulted interest, notice whereof shall be given to the registered holders
of the Series 5.50% Debentures not less than 10 days prior to such special
record date, or may be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange on which the
Series 5.50% Debentures may be listed, and upon such notice as may be required
by such exchange, all as more fully provided in the Indenture.
The amount of interest payable for any period will be computed on the
basis of a 360-day year of twelve 30-day months. In the event that any date on
which interest is payable on the Series 5.50% Debentures is not a business day,
then payment of interest payable on such date will be made on the next
succeeding day which is a business day (and without any interest or other
payment in respect of any such delay), except that, if such business day is in
the next succeeding calendar year, such payment shall be made on the immediately
preceding business day, in each case with the same force and effect as if made
on such date.
If at any time AES Trust II shall be required to pay any taxes, duties,
assessments or governmental charges of whatever nature (other than withholding
taxes) imposed by the U.S., or any other taxing authority, then, in any such
case, the Company will pay as additional interest ("ADDITIONAL INTEREST") on the
Series 5.50% Debentures such additional amounts as shall be required so that the
net amounts received and retained by AES Trust II after paying any such taxes,
duties, assessments or other governmental charges will be equal to the amounts
AES Trust II would have received had no such taxes, duties, assessments, or
other governmental charges been imposed.
SECTION 1.04. If distributed to holders of Preferred Securities in
connection with a Dissolution Event, the Series 5.50% Debentures will be issued
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to such holders in the same form as the Preferred Securities that such Series
5.50% Debentures replace in accordance with the following procedures:
So long as Series 5.50% Debentures are eligible for book-entry
settlement with the Depositary, or unless otherwise required by law, all Series
5.50% Debentures that are so eligible may be represented by one or more Series
5.50% Debentures in global form registered in the name of the Depositary or the
nominee of the Depositary, except as otherwise specified below. The transfer and
exchange of beneficial interests in any such Series 5.50% Debenture in global
form shall be effected through the Depositary in accordance with this Indenture
and the procedures of the Depositary therefor.
Series 5.50% Debentures that are distributed to "qualified
institutional buyers" within the meaning of Rule 144A ("QIBs") under the
Securities Act of 1933, as amended (the "Securities Act") or to institutional
"accredited investors" as defined in Rule 501(a)(1),(2),(3) or (7) ("IAIs")
under the Securities Act in replacement of Preferred Securities represented by a
global Preferred Security will be represented by one or more global Series 5.50%
Debentures (the "144A GLOBAL DEBENTURE"). Series 5.50% Debentures that are
distributed to Non-U.S. Persons in replacement of Preferred Securities
represented by a global Preferred Security will be represented by one or more
global Series 5.50% Debenture (the "REGULATION S GLOBAL DEBENTURE"). Each of the
144A Global Debenture and the Regulation S Global Debenture shall be referred to
herein as a Global Debenture. Series 5.50% Debentures that are distributed to
QIBs, IAIs or Non-U.S. Persons in replacement of Certificated Preferred
Securities will be represented by definitive Series 5.50% Debentures as set
forth in this Section 1.04. If Global Debentures are issued, transfers of
interests in the Series 5.50% Debentures between the 144A Global Debenture and
the Regulation S Global Debenture will be made in accordance with the standing
instructions and procedures of the Depositary and its participants and the
Trustee shall make appropriate endorsements to reflect increases or decreases in
the principal amounts of such Global Debentures to reflect any such transfers.
Except as provided below, beneficial owners of a Series 5.50% Debenture
in global form shall not be entitled to have certificates registered in their
names, will not receive or be entitled to receive physical delivery of
certificates in definitive form and will not be considered Holders of such
Series 5.50% Debentures in global form.
(i) Preferred Securities held in certificated form, except for
certificates representing Preferred Securities held by the Depositary
or its nominee (or any successor Clearing Agency or its nominee), shall
upon presentation to the Trustee by the Property Trustee or by the
holder thereof
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or by the Property Trustee on behalf of such holders shall be exchanged
for Series 5.50% Debentures in fully registered certificated form of
like aggregate principal amount and tenor.
So long as the Series 5.50% Debentures are eligible for book-entry
settlement, and to the extent that Series 5.50% Debentures are held by QIBs or
Non-U.S. Persons, as the case may be, in a Global Debenture, or unless otherwise
required by law, upon any transfer of a definitive Series 5.50% Debenture to a
QIB in accordance with Rule 144A or to a Non-U.S. Person in accordance with
Regulation S, unless otherwise requested by the transferor, and upon receipt of
the definitive Series 5.50% Debentures or Series 5.50% Debentures being so
transferred, together with a certification from the transferor that the transfer
is being made in compliance with Rule 144A or Regulation S, as the case may be
(or other evidence satisfactory to the Trustee), the Trustee shall make an
endorsement on any 144A Global Debenture or any Regulation S Global Debenture,
as the case may be, to reflect an increase in the aggregate principal amount of
the Series 5.50% Debentures represented by such Global Debenture, and the
Trustee shall cancel such definitive Series 5.50% Debenture or Series 5.50%
Debentures in accordance with the standing instructions and procedures of the
Depositary, the aggregate principal amount of Series 5.50% Debentures
represented by such Global Debenture to be increased accordingly; provided that
no definitive Series 5.50% Debenture, or portion thereof, in respect of which
the Company or an Affiliate of the Company held any beneficial interest shall be
included in such Global Debenture until such definitive Series 5.50% Debenture
is freely tradable in accordance with Rule 144(k); provided further that the
Trustee shall, at the written request of the Company, issue Series 5.50%
Debentures in definitive form upon any transfer of a beneficial interest in the
Global Debenture to the Company or any Affiliate of the Company.
Any Global Debenture may be endorsed with or have incorporated in the
text thereof such legends or recitals or changes not inconsistent with the
provisions of this Indenture as may be required by the Depositary, by the
National Association of Securities Dealers, Inc. in order for the Series 5.50%
Debentures to be tradeable on the PORTAL Market or as may be required for the
Series 5.50% Debentures to be tradeable on any other market developed for
trading of securities pursuant to Rule 144A or required to comply with any
applicable law or any regulation thereunder or with the rules and regulations of
any securities exchange upon which the Series 5.50% Debentures may be listed or
traded or to conform with any usage with respect thereto, or to indicate any
special limitations or restrictions to which any particular Series 5.50%
Debentures are subject.
Each Debenture that bears or is required to bear the legend set forth
in this Section 1.04 (a "RESTRICTED SECURITY") shall be subject to the
restrictions on
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transfer provided in the legend set forth in this Section 1.04, unless such
restrictions on transfer shall be waived by the written consent of the Company,
and the Holder of each Restricted Security, by such securityholder's acceptance
thereof, agrees to be bound by such restrictions on transfer. As used in this
Section 1.04, the terms "transfer" encompasses any sale, pledge, transfer or
other disposition of any Restricted Security.
Prior to the Transfer Restriction Termination Date (as defined in the
Declaration of Trust), any certificate evidencing a Series 5.50% Debenture or
Common Stock issued upon the conversion or exchange of any Series 5.50%
Debenture shall bear a legend in substantially the following form, unless
otherwise agreed by the Company (with written notice thereof to the Trustee):
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS
ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT), (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" IN
RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT (AN
"INSTITUTIONAL ACCREDITED INVESTOR")), OR (C) IT IS NOT A U.S. PERSON
AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION (2) AGREES
THAT IT WILL NOT PRIOR TO THE EXPIRATION OF THE HOLDING PERIOD
APPLICABLE TO SALES OF THE SECURITY EVIDENCED HEREBY UNDER RULE 144(k)
UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION), RESELL OR
OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO AES OR ANY SUBSIDIARY
THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL
BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE
THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, BEFORE
SUCH TRANSFER FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER
OF THIS SECURITY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE
TRUSTEE) AND IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL
AMOUNT OF SECURITIES
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LESS THAN $250,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE TRUST THAT
SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (D) OUTSIDE THE
UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904
UNDER THE SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF
AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON
TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE
EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS SECURITY
PRIOR TO THE EXPIRATION DATE OF THE HOLDING PERIOD APPLICABLE TO SALES
OF THE SECURITY EVIDENCED HEREBY UNDER RULE 144(k) UNDER THE SECURITIES
ACT (OR ANY SUCCESSOR PROVISION), THE TRANSFEROR MUST CHECK THE
APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER
OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE PROPERTY TRUSTEE.
IF THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR, THE
TRANSFEROR MUST, BEFORE SUCH TRANSFER, FURNISH TO THE ISSUER SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS IT MAY
REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT
TO AN EXEMPTION FROM OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE
TERMS "OFFSHORE TRANSACTION", "UNITED STATES" AND "U.S. PERSON" HAVE
THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.
Following the Transfer Restriction Termination Date or the sale of a
Debenture or Common Stock issued upon the conversion or exchange of a Debenture
pursuant to an effective registration statement or Rule 144 (or any successor
provision) under the Securities Act, any Debenture or security issued in
exchange or substitution therefor (other than (i) Series 5.50% Debentures
acquired by the Company or any Affiliate thereof since the issue date of the
Preferred Securities and (ii) Common Stock issued upon the conversion or
exchange of any
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Debenture described in clause (i) above) may upon surrender of such Debenture
for exchange to the Debenture Registrar in accordance with the provisions of
this Section 1.04, be exchanged for a new Debenture or Series 5.50% Debentures,
of like tenor and aggregate principal amount, which shall not bear the
restrictive legend required by this Section 1.04.
Notwithstanding any other provisions of the Indenture (other than the
provisions set forth in this Section 1.04), a Global Debenture may not be
transferred as a whole except by the Depositary to a nominee of the Depositary
or by a nominee of the Depositary to the Depositary or another nominee to a
successor Depositary or a nominee of such successor Depositary.
The Depositary shall be a clearing agency registered under the Exchange
Act. The Company initially appoints The Depository Trust Company to act as
Depositary with respect to the Series 5.50% Debentures in global form.
Initially, the Global Debentures shall be issued to the Depositary, registered
in the name of Cede & Co., as the nominee of the Depositary, and deposited with
the Trustee as custodian for Cede & Co.
If at any time the Depositary for the Global Debentures notifies the
Company that it is unwilling or unable to continue as Depositary for such Series
5.50% Debentures, the Company may appoint a successor Depositary with respect to
such Series 5.50% Debentures. If a successor Depositary for the Series 5.50%
Debentures is not appointed by the Company within 90 days after the Company
receives such notice, the Company will execute, and the Trustee, upon receipt of
an Officers' Certificate for authentication and delivery of Series 5.50%
Debentures, will authenticate and deliver, Series 5.50% Debentures in definitive
form, in an aggregate principal amount equal to the principal amount of the
Global Debentures, in exchange for such Global Debentures.
Definitive Series 5.50% Debentures issued in exchange for all or a part
of a Global Debenture pursuant to this Section 1.04 shall be registered in such
names and in such authorized denominations as the Depositary, pursuant to
instructions from its direct or indirect participants or otherwise, shall
instruct the Trustee. Upon execution and authentication, the Trustee shall
deliver such definitive Series 5.50% Debentures to the person in whose names
such definitive Series 5.50% Debentures are so registered.
At such time as all interests in a Global Debenture have been redeemed,
converted, exchanged, repurchased or canceled, such Global Debenture shall be,
upon receipt thereof, canceled by the Trustee in accordance with standing
procedures and instructions of the Depositary. At any time prior to such
cancellation, if any interest in a Global Debenture is exchanged for definitive
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Series 5.50% Debentures, redeemed by the Company pursuant to Article 2 or
canceled, or transferred for part of a Global Debenture, the principal amount of
such Global Debenture shall, in accordance with the standing procedures and
instructions of the Depositary be reduced or increased, as the case may be, and
an endorsement shall be made on such Global Debenture by, or at the direction
of, the Trustee to reflect such reduction or increase. Following such redemption
by the Company or cancellation, or transfer, the Company will execute and
Trustee will authenticate and make available for delivery to the transferee (or
such transferee's nominee, as the case may be), a Series 5.50% Debenture in the
appropriate aggregate principal amount and bearing such restrictive legends as
may be required by this Indenture.
Any Series 5.50% Debenture or Common Stock issued upon the conversion
or exchange of a Series 5.50% Debenture that, prior to the Transfer Restriction
Termination Date, is purchased or owned by the Company or any Affiliate thereof
may not be resold by the Company or such Affiliate unless registered under the
Securities Act or resold pursuant to an exemption from the registration
requirements of the Securities Act in a transaction which results in such Series
5.50% Debentures or Common Stock, as the case may be, no longer being
"restricted securities" (as defined under Rule 144).
ARTICLE 2
OPTIONAL REDEMPTION OF THE SERIES 5.50% DEBENTURES
SECTION 2.01. Except as provided in Section 2.02 and subject to the
provisions below, Series 5.50% Debentures may not be redeemed by the Company
prior to September 30, 2000. Subject to the terms of Article Three of the
Indenture, the Company shall have the right to redeem the Series 5.50%
Debentures, in whole or in part, from time to time, on or after September 30,
2000, upon not less than 30 nor more than 60 days notice to the Holder of the
Series 5.50% Debentures, at the following prices (expressed as percentages of
the principal amount of the Series 5.50% Debentures) (the "OPTIONAL REDEMPTION
PRICE"), together with any accrued and unpaid interest thereon, including
Compounded Interest (as defined herein), if any, to, but excluding, the date of
such redemption, if redeemed during the 12-month period beginning September 30.
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YEAR REDEMPTION PRICE
---- ----------------
2000 103.438%
2001 102.750%
2002 102.063%
2003 101.375%
2004 100.688%
and 100% if redeemed on or after September 30, 2005.
If the Series 5.50% Debentures are redeemed on any Interest Payment
Date, accrued and unpaid interest shall be payable to Holders of record on the
relevant record date.
The Company may not redeem any Series 5.50% Debenture unless all
accrued and unpaid interest thereon, including Compounded Interest, if any, has
been paid for all quarterly periods terminating on or prior to the date of
notice of redemption. So long as the corresponding Trust Securities are
outstanding, the proceeds from the redemption of the Series 5.50% Debentures
will be used to redeem the Trust Securities.
If the Company gives a notice of redemption in respect of Junior
Subordinated Debentures (which notice will be irrevocable), then, by 12:00 noon,
New York City time, on the redemption date, the Company will deposit irrevocably
with the Indenture Trustee funds sufficient to pay the applicable Redemption
Price and will give irrevocable instructions and authority to pay such
Redemption Price to the holders of the Junior Subordinated Debentures.
If any date fixed for redemption of Junior Subordinated Debentures is
not a Business Day, then payment of the Redemption Price payable on such date
will be made on the next succeeding day that is a Business Day (and without any
interest or other payment in respect of any such delay) except that, if such
Business Day falls in the next calender year, such payment will be made on the
immediately preceding Business Day, in each case with the same force and effect
as if made on such date fixed for redemption.
In the event of any redemption in part, the Company shall not be
required to (i) issue, register the transfer of or exchange any Junior
Subordinated Debentures during a period beginning at the opening of business 15
days before any selection for redemption of Junior Subordinated Debentures and
ending at the close of business on the earliest date on which the relevant
notice of redemption is deemed to have been given to all holders of Junior
Subordinated Debentures to be redeemed and (ii) register the transfer of or
exchange any Junior Subordinated
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Debentures so selected for redemption, in whole or in part, except the
unredeemed portion of any Junior Subordinated Debentures being redeemed in part.
SECTION 2.02. If, at any time, a Tax Event (as defined below) shall
occur or be continuing and (i) the Regular Trustees and the Company shall have
received an opinion (a "REDEMPTION TAX OPINION") of a nationally recognized
independent tax counsel experienced in such matters that, as a result of a Tax
Event, there is more than an insubstantial risk that the Company would be
precluded from deducting the interest on the Series 5.50% Debentures for United
States federal income tax purposes even if the Series 5.50% Debentures were
distributed to the holders of Preferred Securities and Common Securities in
liquidation of such holder's interest in AES Trust II as set forth in the
Declaration of Trust or (ii) the Regular Trustees shall have been informed by
such tax counsel that a No Recognition Opinion (as defined below) cannot be
delivered to AES Trust II, the Company shall have the right at any time, upon
not less than 30 nor more than 60 days' notice, to redeem the Series 5.50%
Debentures in whole or in part for cash at a price equal to 100% of the
principal amount thereof, together with any accrued and unpaid interest thereon,
including Compounded Interest, if any, to, but excluding the date of redemption,
within 90 days following the occurrence of such Tax Event; provided, however,
that, if at the time there is available to the Company or the Regular Trustees
on behalf of AES Trust II the opportunity to eliminate, within such 90 day
period, the Tax Event by taking some ministerial action ("MINISTERIAL ACTION"),
such as filing a form or making an election, or pursuing some other similar
reasonable measure, which has no adverse effect on AES Trust II, the Company or
the holders of the Preferred Securities, the Company or the Regular Trustees on
behalf of AES Trust II will pursue such measure in lieu of redemption and
provided further that the Company shall have no right to redeem the Series 5.50%
Debentures while the Regular Trustees on behalf of AES Trust II are pursuing any
such Ministerial Action.
"TAX EVENT" means that the Company and the Regular Trustees shall have
obtained an opinion of nationally recognized independent tax counsel experienced
in such matters (a "DISSOLUTION TAX OPINION") to the effect that on or after
October 23, 1997 as a result of (a) any amendment to, or change in, the laws (or
any regulations thereunder) of the United States or any political subdivision or
taxing authority thereof or therein, (b) any amendment to, or change in, an
interpretation or application of any such laws or regulations by any legislative
body, court, governmental agency or regulatory authority (including the
enactment of any legislation and the publication of any judicial decision or
regulatory determination), (c) any interpretation or pronouncement that provides
for a position with respect to such laws or regulations that differs from the
theretofore generally accepted position or (d) any action taken by any
governmental agency or regulatory authority, which amendment or change is
enacted, promulgated, issued
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or effective or which interpretation or pronouncement is issued or announced or
which action is taken, in each case on or after October 23, 1997 there is more
than an insubstantial risk that (i) AES Trust II is, or will be within 90 days
of the date thereof, subject to United States federal income tax with respect to
income accrued or received on the Series 5.50% Debentures, (ii) AES Trust II is,
or will be within 90 days of the date thereof, subject to more than a de minimis
amount of taxes, duties or other governmental charges or (iii) interest payable
by the Company to AES Trust II on the Series 5.50% Debentures is not, or within
90 days of the date thereof will not be, deductible by the Company for United
States federal income tax purposes.
"NO RECOGNITION OPINION" means an opinion of a nationally recognized
independent tax counsel experienced in such matters, which opinion may rely on
any then applicable published revenue ruling of the Internal Revenue Service, to
the effect that the holders of the Preferred Securities will not recognize any
gain or loss for United States federal income tax purposes as a result of a
dissolution of AES Trust II and distribution of the Series 5.50% Debentures as
provided in the Declaration of Trust.
SECTION 2.03. If the Series 5.50% Debentures are only partially
redeemed pursuant to this Article Two, the Series 5.50% Debentures will be
redeemed pro rata or by lot or by any other method utilized by the Trustee,
provided that if at the time of redemption, the Series 5.50% Debentures are
registered as a Global Debenture, the Depository shall determine by lot the
principal amount of such Series 5.50% Debentures held by each Debenture Holder
to be redeemed in accordance with its customary procedures. Notwithstanding the
foregoing, if a partial redemption of the Series 5.50% Debentures would result
in the delisting of the Preferred Securities by any national securities exchange
or other organization on which the Preferred Securities are then listed, the
Company shall not be permitted to effect such partial redemption and will only
redeem the Series 5.50% Debentures in whole.
ARTICLE 3
EXTENSION OF INTEREST PAYMENT PERIOD
SECTION 3.01. So long as the Company is not in default in the payment
of interest on the Series 5.50% Debentures, the Company shall have the right, at
any time during the term of the Series 5.50% Debentures, from time to time to
extend the interest payment period of such Series 5.50% Debentures for up to 20
consecutive quarterly interest periods (the "EXTENDED INTEREST PAYMENT PERIOD"),
at the end of which period the Company shall pay all interest accrued
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and unpaid thereon (together with interest thereon at the rate of 5.50% per
annum to the extent permitted by applicable law, compounded quarterly
("COMPOUNDED INTEREST")); provided that no Extended Interest Payment Period may
extend beyond the Maturity Date or redemption date of the Series 5.50%
Debentures. During such Extended Interest Payment Period the Company shall not
declare or pay any dividend on, or redeem, purchase, acquire or make a
distribution or liquidation payment with respect to, any of its common stock or
preferred stock or make any guarantee payments with respect thereto; provided
that the foregoing will not apply to any stock dividends paid by the Company in
Common Stock. Prior to the termination of any such Extended Interest Payment
Period, the Company may pay all or any portion of the interest accrued on the
Series 5.50% Debentures on any Interest Payment Date to holders of record on the
regular record date for such Interest Payment Date or from time to time further
extend such Period; provided that such Period together with all such further
extensions thereof shall not exceed 20 consecutive quarterly interest periods.
Upon the termination of any Extended Interest Payment Period and upon the
payment of all accrued and unpaid interest then due, together with Compounded
Interest, the Company may select a new Extended Interest Payment Period, subject
to the foregoing requirements. No interest shall be due and payable during an
Extended Interest Payment Period, except at the end thereof. At the end of the
Extended Interest Payment Period the Company shall pay all interest accrued and
unpaid on the Series 5.50% Debentures including any Compounded Interest which
shall be payable to the holders of the Series 5.50% Debentures in whose names
the Series 5.50% Debentures are registered in the Debenture register on the
first record date after the end of the Extended Interest Payment Period.
SECTION 3.02. (a) So long as the Property Trustee is the legal owner
and holder of record of the Series 5.50% Debentures, at the time the Company
selects an Extended Interest Payment Period, the Company shall give both the
Property Trustee and the Trustee written notice of its selection of such
Extended Interest Payment Period one business day prior to the earlier of (i)
the next succeeding date on which distributions on the Preferred Securities are
payable or (ii) the date AES Trust II is required to give notice of the record
date or the date such distributions are payable to holders of the Preferred
Securities, but in any event not less than one business day prior to such record
date. The Company shall cause AES Trust II to give notice of the Company's
selection of such Extended Interest Payment Period to the holders of the
Preferred Securities.
(b) If as a result of a Dissolution Event Series 5.50% Debentures have
been distributed to holders of Preferred Securities and Common Securities, at
the time the Company selects an Extended Interest Payment Period, the Company
shall give the holders of the Series 5.50% Debentures and the Trustee written
notice of its selection of such Extended Interest Payment Period at least 10
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business days prior to the earlier of (i) the next succeeding Interest Payment
Date or (ii) the date the Company is required to give notice of the record or
payment date of such interest payment to the New York Stock Exchange or other
applicable self-regulatory organization or to holders of the Series 5.50%
Debentures.
SECTION 3.03. The quarter in which any notice is given pursuant to
Section 3.02 shall be counted as one of the quarters permitted in the maximum
Extended Interest Payment Period permitted under this Article Three.
ARTICLE 4
COVENANTS APPLICABLE TO SERIES 5.50% DEBENTURES
SECTION 4.01. So long as any Preferred Securities remain outstanding,
the Company will not declare or pay any dividends on, or redeem, purchase,
acquire or make a distribution or liquidation payment with respect to, any of
its common stock or preferred stock or make any guarantee payments with respect
thereto if at such time (i) the Company shall be in default with respect to its
Guarantee Payments (as defined in the Guarantee Agreement) or other payment
obligations under the Guarantee Agreement, (ii) there shall have occurred any
Event of Default under the Indenture with respect to the Series 5.50% Debentures
or (iii) the Company shall have given notice of its election of an Extended
Interest Payment Period and such Period, or any extension thereof, is
continuing; provided that the foregoing will not apply to any stock dividends
paid by the Company in Common Stock.
SECTION 4.02. In connection with the distribution of the Series 5.50%
Debentures to the holders of the Preferred Securities upon a Dissolution Event,
the Company will use its best efforts to list such Series 5.50% Debentures on
the New York Stock Exchange or on such other exchange as the Preferred
Securities are then listed and traded.
SECTION 4.03. The Company covenants and agrees for the benefit of the
holders of the Preferred Securities to comply fully with all of its obligations
and agreements under the Declaration of Trust, including, without limitation,
its obligations under Article 4 thereof.
SECTION 4.04. Prior to the distribution of Series 5.50% Debentures to
the holders of Preferred Securities upon a Dissolution Event, the Company
covenants and agrees for the benefit of the holders of the Preferred Securities
(i) not to cause or permit the Common Securities to be transferred except as
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permitted by the Declaration of Trust and (ii) that it will use reasonable
efforts to cause the Trust to continue to be treated as a grantor trust for
United States federal income tax purposes, except in connection with a
distribution of the Series 5.50% Debentures as provided in the Declaration of
Trust.
ARTICLE 5
CONVERSION OF DEBENTURES
SECTION 5.01. Subject to and upon compliance with the provisions of
this Article Five, the Series 5.50% Debentures are convertible at the option of
the Holder, at any time through the close of business on September 30, 2012 (or,
in the case of Series 5.50% Debentures called for redemption, prior to the close
of business on the Business Day prior to the corresponding redemption date) into
fully paid and nonassessable shares of Common Stock of the Company at an initial
conversion rate of 0.8914 shares of Common Stock for each $50 in aggregate
principal amount of Series 5.50% Debentures (equal to a conversion price (as
adjusted from time to time, the "CONVERSION PRICE") of $56.09 per share of
Common Stock), subject to adjustment as described in this Article Five. A Holder
of Series 5.50% Debentures may convert any portion of the principal amount of
the Series 5.50% Debentures into that number of fully paid and nonas sessable
shares of Common Stock obtained by dividing the principal amount of the Series
5.50% Debentures to be converted by such conversion price. All calculations
under this Article Five shall be made to the nearest cent or to the nearest
1/100th of a share, as the case may be.
SECTION 5.02. (a) In order to convert all or a portion of the Series
5.50% Debentures, the Holder thereof shall deliver to the Conversion Agent an
irrevocable Notice of Conversion setting forth the principal amount of Series
5.50% Debentures to be converted, together with the name or names, if other than
the Holder, in which the shares of Common Stock should be issued upon conversion
and, if such Series 5.50% Debentures are definitive Series 5.50% Debentures,
surrender to the Conversion Agent the Series 5.50% Debentures to be converted,
duly endorsed or assigned to the Company or in blank. In addition, a holder of
Preferred Securities may exercise its right under the Declaration of Trust to
convert such Preferred Securities into Common Stock by delivering to the
Conversion Agent an irrevocable Notice of Conversion setting forth the
information called for by the preceding sentence and directing the Conversion
Agent to (i) exchange such Preferred Security for a portion of the Series 5.50%
Debentures held by the Trust (at an exchange rate of $50 principal amount of
Series 5.50% Debenture for each Preferred Security) and (ii) immediately convert
such Series 5.50% Debenture, on behalf of such holder, into Common Stock of
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the Company pursuant to this Article Five and, if such Preferred Securities are
in definitive form, surrendering such Preferred Securities, duly endorsed or
assigned to the Company or in blank. So long as any Preferred Securities are
outstanding, the Trust shall not convert any Series 5.50% Debenture except
pursuant to a Notice of Conversion delivered to the Conversion Agent by a holder
of Preferred Securities. Any reference herein to a "HOLDER" of Preferred
Securities shall mean a "HOLDER" of such securities as defined in the
Declaration of Trust.
If a Preferred Security is surrendered for conversion after the close
of business on any regular record date for payment of a Distribution and before
the opening of business on the corresponding Distribution payment date, then,
notwithstanding such conversion, the Distribution payable on such Distribution
payment date will be paid in cash to the person in whose name the Series 5.50%
Debenture is registered at the close of business on such record date, and (other
than a Series 5.50% Debenture or a portion of a Series 5.50% Debenture called
for redemption on a redemption date occurring after such record date and on or
prior to such Distribution payment date) when so surrendered for conversion, the
Series 5.50% Debenture must be accompanied by payment of an amount equal to the
Distribution payable on such Distribution payment date. Except as otherwise
provided in the immediately preceding sentence, in the case of any Series 5.50%
Debenture which is converted, interest whose Maturity Date is after the date of
conversion of such Series 5.50% Debenture shall not be payable, and the Company
shall not make nor be required to make any other payment, adjustment or
allowance with respect to accrued but unpaid interest on the Series 5.50%
Debenture being converted, which shall be deemed to be paid in full. Each
conversion shall be deemed to have been effected immediately prior to the close
of business on the day on which the Notice of Conversion was received (the
"CONVERSION DATE") by the Conversion Agent from the Holder or from a holder of
the Preferred Securities effecting a conversion thereof pursuant to its
conversion rights under the Declaration, as the case may be. The Person or
Persons entitled to receive the Common Stock issuable upon such conversion shall
be treated for all purposes as the record holder or holders of such Common Stock
as of the Conversion Date. As promptly as practicable on or after the Conversion
Date, the Company shall issue and deliver at the office of the Conversion Agent,
unless otherwise directed by the Holder in the Notice of Conversion, a
certificate or certificates for the number of full shares of Common Stock
issuable upon such conversion, together with the cash payment, if any, in lieu
of any fraction of any share to the Person or Persons entitled to receive the
same. The Conversion Agent shall deliver such certificate or certificates to
such Person or Persons.
(b) The Company's delivery upon conversion of the fixed number of
shares of Common Stock into which the Series 5.50% Debentures are convertible
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(together with the cash payment, if any, in lieu of fractional shares) shall be
deemed to satisfy the Company's obligation to pay the principal amount at
maturity of the portion of Series 5.50% Debentures so converted and any unpaid
interest (including Compounded Interest) accrued on such Series 5.50% Debentures
at the time of such conversion.
(c) No fractional shares of Common Stock will be issued as a result of
conversion, but in lieu thereof, the Company shall pay to the Conversion Agent a
cash adjustment in an amount equal to the same fraction of the Closing Price of
such fractional interest on the date on which the Series 5.50% Debentures were
duly surrendered to the Conversion Agent for conversion, or, if such day is not
a day on which any securities are traded on the national securities exchange or
quotation system used to determine the Closing Price (a "TRADING DAY"), on the
next Trading Day, and the Conversion Agent in turn will make such payment, if
any, to the Holder of the Series 5.50% Debentures or the holder of the Preferred
Securities so converted.
(d) In the event of the conversion of any Series 5.50% Debenture in
part only, a new Series 5.50% Debenture or Series 5.50% Debentures for the
unconverted portion thereof will be issued in the name of the Holder thereof
upon the cancellation thereof in accordance with Section 2.05 of the Indenture.
(e) In effecting the conversion transactions described in this Section
5.02, the Conversion Agent is acting as agent of the holders of Preferred
Securities (in the exchange of Preferred Securities for Series 5.50% Debentures)
and as agent of the Holders of Series 5.50% Debentures (in the conversion of
Series 5.50% Debentures into Common Stock), as the case may be. The Conversion
Agent is hereby authorized (i) to exchange Series 5.50% Debentures held by the
Trust from time to time for Preferred Securities in connection with the
conversion of such Preferred Securities in accordance with this Article Five and
(ii) to convert all or a portion of the Series 5.50% Debentures into Common
Stock and thereupon to deliver such shares of Common Stock in accordance with
the provisions of this Article Five and to deliver to the Trust a new Series
5.50% Debenture or Series 5.50% Debentures for any resulting unconverted
principal amount.
SECTION 5.03. (a) The Conversion Price shall be adjusted from time to
time as follows:
(i) In case the Company shall pay or make a dividend or other
distribution on Common Stock in shares of Common Stock, then the
Conversion Price in effect at the opening of business on the day
following the date fixed for the determination of shareholders entitled
to receive such
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dividend or other distribution shall be reduced by multiplying such
Conversion Price by a fraction the numerator of which shall be the
number of shares of Common Stock outstanding at the close of business
on the date fixed for such determination and the denominator of which
shall be the sum of such number of shares and the total number of
shares constituting such dividend or other distribution, such reduction
to become effective immediately after the opening of business on the
day following the date fixed for such determination. For the purposes
of this subparagraph (i), the number of shares of Common Stock at any
time outstanding shall not include shares held in the treasury of the
Company (except to the extent such dividend or distribution is being
made with respect to such shares) but shall include shares issuable in
respect of scrip certificates issued in lieu of fractions of shares of
Common Stock.
(ii) In case the outstanding shares of Common Stock shall be
subdivided into a greater number of shares of Common Stock, then the
Conversion Price in effect at the opening of business on the day
following the day upon which such subdivision becomes effective shall
be proportionately reduced, and, conversely, in case the outstanding
shares of Common Stock shall be combined into a smaller amount of
shares of Common Stock, then the Conversion Price in effect at the
opening of business on the day following the day upon which such
combination becomes effective shall be proportionately increased, such
reduction or increase, as the case may be, to become effective
immediately after the opening of business on the day following the day
upon which such subdivision or combination becomes effective.
(iii) In case the Company shall issue rights or warrants to all
holders of Common Stock entitling them (for a period expiring within 45
days after the record date fixed for a distribution of such rights or
warrants) to subscribe for or purchase shares of Common Stock at a
price per share less than the Current Market Price (as hereinafter
defined) per share (determined as provided in subparagraph (vii) below)
of Common Stock on the date fixed for the determination of shareholders
entitled to receive such rights or warrants (other than pursuant to a
dividend reinvestment plan), then the Conversion Price in effect at the
opening of business on the day following the date fixed for such
determination shall be reduced by multiplying such Conversion Price by
a fraction the numerator of which shall be the number of shares of
Common Stock outstanding at the close of business on the date fixed for
such determination plus the number of shares of Common Stock which the
aggregate of the offering price of the total number of shares of Common
Stock so offered for subscription or purchase would purchase at such
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Current Market Price and the denominator shall be the number of shares
of Common Stock outstanding at the close of business on the date fixed
for such determination plus the number of shares of Common Stock so
offered for subscription or purchase, such reduction to become
effective immediately after the opening of business on the day
following the date fixed for such determination. For the purposes of
this subparagraph (iii), the number of shares of Common Stock at any
time outstanding shall not include shares held in the treasury of the
Company but shall include shares issuable in respect of scrip
certificates issued in lieu of fractions of shares of Common Stock. The
Company agrees not to issue any rights or warrants in respect of shares
of Common Stock held in the treasury of the Company. To the extent that
shares of Common Stock are not delivered after the expiration of such
rights or warrants, the Conversion Price shall be readjusted to the
Conversion Price which would then be in effect had the adjustments made
in respect of the issuance of such rights or warrants been made on the
basis of delivery of only the number of shares of Common Stock actually
delivered.
(iv) Subject to the second paragraph of this subparagraph (iv), in case
the Company shall, by dividend or otherwise, distribute to all holders
of Common Stock (A) shares of capital stock of the Company (other than
Common Stock), (B) evidence of indebtedness of the Company and/or (C)
other assets (including securities, but excluding (1) any rights or
warrants referred to in subparagraph (iii) above, (2) any rights or
warrants to obtain capital stock of a company other than the Company or
any subsidiary of the Company (including any rights offerings of the
Company with respect to capital stock of companies in which the Company
has an investment (a "RIGHTS OFFERING")), (3) dividends or
distributions in connection with the liquidation, dissolution or
winding-up of the Company, (4) dividends payable solely in cash that
may from time to time be fixed by the Board of Directors of the Company
and (5) dividends or distributions referred to in subparagraph (i)
above), then in each case (unless the Company makes the election
referred to in the next sentence) the Conversion Price shall be
adjusted so that the same shall equal the price determined by
multiplying the Conversion Price in effect immediately prior to the
close of business on such record date by a fraction the numerator of
which shall be the Current Market Price per share (determined as
provided in subparagraph (vii) below) of the Common Stock on such
record date (the "REFERENCE DATE") less the then fair market value on
the Reference Date (as determined in good faith by the Board of
Directors of the Company, whose determination shall be conclusive and
shall be described in a statement filed with the Depositary and the
Trustee) of the portion of the shares of capital stock of the Company,
evidences of indebtedness or other assets so
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distributed (and for which an adjustment to the Conversion Price has
not been made previously pursuant to the terms of this Article Five)
applicable to one share of Common Stock and the denominator shall be
such Current Market Price per share of the Common Stock, such
adjustment to become effective immediately prior to the opening of
business on the day following the Reference Date. However, the Company
may elect, in its sole discretion, in lieu of the foregoing adjustment,
to make adequate provision so that each holder of Securities shall have
the right to receive upon conversion thereof the amount and kind of
shares of capital stock, evidences of indebtedness or other assets such
holder would have received had such holder converted such shares on
such record date. If the Board of Directors of the Company determines
the fair market value of any distribution for purposes of this
subparagraph (iv) by reference to the actual or when issued trading
market for any securities (including shares of capital stock or
evidence of indebtedness of the Company) comprising a distribution of
securities, it must in doing so consider the price in such market over
the period used in computing the Current Market Price of the Common
Stock.
For purposes of this subparagraph (iv), any dividend or
distribution that includes both (x) any of the items described in
clauses (A), (B) or (C) of the first paragraph of this subparagraph
(iv) and (y) Common Stock or rights or warrants to subscribe for or
purchase Common Stock of the type referred to in subparagraph (iii)
shall be deemed to be (1) a dividend or distribution of shares of
capital stock of the Company (other than Common Stock), evidences of
indebtedness of the Company or other assets of the type referred to in
clause (C) of the first paragraph of this subparagraph (iv) (making any
Conversion Price reduction required by this subparagraph (iv))
immediately followed by (2) a dividend or distribution of such Common
Stock or rights or warrants to purchase Common Stock of the type
referred to in subparagraph (iii) (making any further Conversion Price
reduction required by subparagraph (i) or (iii) of this Section
5.03(a)), except (A) the Reference Date of such dividend or
distribution as defined in this subparagraph (iv) shall be substituted
as "the date fixed for the determination of shareholders entitled to
receive such rights or warrants" and "the date fixed for such
determination" within the meaning of subparagraphs (i) and (iii) of
this Section 5.03(a) and (B) any shares of Common Stock included in
such dividend or distribution shall not be deemed "outstanding at the
close of business on the date fixed for such determination" within the
meaning of subparagraph (i) of this Section 5.03(a).
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The occurrence of a distribution or the occurrence of any
other event as a result of which holders of Series 5.50% Debentures
converting such notes into Common Stock hereunder will not be entitled
to receive rights issued pursuant to any shareholder protective rights
agreement now or hereafter in effect (the "OTHER RIGHTS") in the same
amount and manner as if such holders had converted such shares
immediately prior to the occurrence of such distribution or other event
shall be deemed a distribution of Other Rights for the purposes of
conversion adjustments pursuant to this subparagraph (iv). In lieu of
making any adjustment to the Conversion Price under this subparagraph
(iv) as a result of such a distribution of Other Rights, the Company
may elect, in its sole discretion, to provide that Other Rights shall
be issuable in the same amount and manner upon conversion of the Series
5.50% Debentures without regard to whether the shares of Common Stock
issuable upon conversion of the Series 5.50% Debentures were issued
before or after such distribution or other event.
(v) In case the Company shall, by dividend or otherwise, at any
time distribute cash to all holders of Common Stock, excluding (A) any
cash dividends on Common Stock to the extent that the aggregate cash
dividends per share of Common Stock in any consecutive 12-month period
do not exceed the greater of (x) the amount per share of Common Stock
of the cash dividends paid on the Common Stock in the immediately
preceding 12-month period, to the extent that such dividends for the
immediately preceding 12-month period did not require an adjustment to
the Conversion Price pursuant to this subparagraph (v) (as adjusted to
reflect subdivisions or combinations of the Common Stock) and (y) 15%
of the average of the daily Closing Prices (as hereinafter defined) of
the Common Stock for the ten consecutive Trading Days immediately prior
to the date of declaration of such dividend and (B) any dividend or
distribution in connection with the liquidation, dissolution or
winding-up of the Company, whether voluntary or involuntary; or any
redemption of any Other Rights; provided, however, that no adjustment
shall be made pursuant to this subparagraph (v) if such distribution
would otherwise constitute a Fundamental Change (as hereinafter
defined) and be reflected in a resulting adjustment to the Conversion
Price as provided in this Article Five) then, in each case (unless the
Company makes the election referred to in the proviso following this
clause), the Conversion Price shall be reduced so that the same shall
equal the price determined by multiplying the Conversion Price in
effect at the close of business on such record date by a fraction the
numerator of which shall be the Closing Price of a share of Common
Stock on such record date less the amount of cash so distributed (to
the extent not excluded as provided above) applicable to
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one share of Common Stock, and the denominator shall be the Closing
Price of a share of Common Stock, such reduction to become effective
immediately prior to the opening of business on the day following such
record date; provided, however, that the Company may elect, in its sole
discretion, in lieu of the foregoing adjustment, to make adequate
provision so that each holder of Securities shall thereafter have the
right to receive upon conversion the amount of cash such holder would
have received had such holder converted each Security on such record
date. If any adjustment is required to be made as set forth in this
subparagraph (v) as a result of a distribution which is a dividend
described in clause (A) of this subparagraph (v), such adjustment will
be based upon the amount by which such distribution exceeds the amount
of the dividend permitted to be excluded pursuant to such clause (A) of
this subparagraph (v). If an adjustment is required to be made pursuant
to this subparagraph (v) as a result of a distribution which is not
such a dividend, such adjustment would be based upon the full amount of
such distribution.
(vi) In case of the consummation of a tender or exchange offer
(other than an odd-lot tender offer) made by the Company or any
subsidiary of the Company for all or any portion of the outstanding
shares of Common Stock to the extent that the cash and fair market
value (as determined in good faith by the Board of Directors of the
Company, whose determination shall be conclusive and shall be described
in a resolution of such Board) of any other consideration included in
such payment per share of Common Stock at the last time (the
"EXPIRATION TIME") tenders or exchanges may be made pursuant to such
tender or exchange offer (as amended) exceed by more than 10%, with any
smaller excess being disregarded in computing the adjustment to the
Conversion Price provided in this subparagraph (vi), the first reported
sale price per share of Common Stock on the Trading Day next succeeding
the Expiration Time, then the Conversion Price shall be reduced so that
the same shall equal the price determined by multiplying the Conversion
Price in effect immediately prior to the Expiration Time by a fraction
the numerator of which shall be the number of shares of Common Stock
outstanding (including any tendered or exchanged shares) on the
Expiration Time multiplied by the first reported sale price of the
Common Stock on the Trading Day next succeeding the Expiration Time and
the denominator shall be the sum of (x) the fair market value
(determined as aforesaid) of the aggregate consideration payable to
shareholders based on the acceptance (up to any maximum specified in
the terms of the tender or exchange offer) of all shares validly
tendered or exchanged and not withdrawn as of the Expiration Time (the
shares deemed so accepted, up to any such maximum, being referred to as
the "PURCHASED SHARES") and (y) the
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<PAGE>
product of the number of shares of Common Stock outstanding (less any
Purchased Shares) on the Expiration Time and the first reported sale
price of the Common Stock on the Trading Day next succeeding the
Expiration Time, such reduction to become effective immediately prior
to the opening of business on the day following the Expiration Time.
(vii) For the purpose of any computation under this Article Five,
the "CURRENT MARKET PRICE PER SHARE" of Common Stock on any day shall
be deemed to be the average of the daily Closing Prices (as hereinafter
defined) per share of Common Stock for the ten consecutive Trading Days
prior to and including the date in question; provided, however, that
(1) if the "ex" date (as hereinafter defined) for any event (other than
the issuance, distribution or Fundamental Change requiring such
computation) that requires an adjustment to the Conversion Price
pursuant to this Article Five (the "OTHER EVENT") occurs during such
ten consecutive Trading Days and prior to the "ex" date for the
issuance, distribution or Fundamental Change requiring such computation
(the "CURRENT EVENT"), the Closing Price for each Trading Day prior to
the "ex" date for such Other Event shall be adjusted by multiplying
such Closing Price by the same fraction by which the Conversion Price
is so required to be adjusted as a result of such Other Event, (2) if
the "ex" date for any Other Event occurs on or after the "ex" date for
the Current Event and on or prior to the date in question, the Closing
Price for each Trading Day on and after the "ex" date for such Other
Event shall be adjusted by multiplying such Closing Price by the
reciprocal of the fraction by which the Conversion Price is so required
to be adjusted as a result of such Other Event (provided that in the
event that such fraction is required to be determined at a date
subsequent to the date in question and with reference to events taking
place subsequent to the date in question, the Board of Directors of the
Company or, to the extent permitted by applicable law, a duly
authorized committee thereof, whose determination shall be conclusive
and described in a resolution of the Board of Directors of the Company
or such duly authorized committee thereof, as the case may be, shall in
good faith estimate such fraction based on assumptions it deems
reasonable regarding such events taking place subsequent to the date in
question, and such estimated fraction shall be used for purposes of
such adjustment until such time as the actual fraction by which the
Conversion Price is so required to be adjusted as a result of such
Other Event is determined), and (3) if the "ex" date for the Current
Event is on or prior to the date in question, after taking into account
any adjustment required pursuant to clause (1) or (2) of this proviso,
the Closing Price for each Trading Day on or after such "ex" date shall
be adjusted by adding thereto the amount of any cash and the fair
market value (as determined in good
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<PAGE>
faith by the Board of Directors of the Company or, to the extent
permitted by applicable law, a duly authorized committee thereof in a
manner consistent with any determination of such value for purposes of
this Article Five, whose determination shall be conclusive and
described in a resolution of the Board of Directors of the Company or
such duly authorized committee thereof, as the case may be) of the
shares of capital stock, evidences of indebtedness or other assets
being distributed applicable to one share of Common Stock as of the
close of business on the day before such "ex" date. For purposes of
this subparagraph (vii), the term "ex" date, (1) when used with respect
to any issuance, distribution or Fundamental Change, means the first
date on which the Common Stock trades regular way on the relevant
exchange or in the relevant market from which the Closing Price was
obtained without the right to receive such issuance, such distribution
or the cash, securities, property or other assets distributable in such
Fundamental Change to holders of the Common Stock, (2) when used with
respect to any subdivision or combination of shares of Common Stock,
means the first date on which the Common Stock trades regular way on
such exchange or in such market after the time at which such
subdivision or combination becomes effective and (3) when used with
respect to any tender or exchange offer means the first date on which
the Common Stock trades regular way on such exchange or in such market
after the Expiration Time of such offer.
(viii) No adjustment in the Conversion Price shall be required
pursuant to this Section 5.03(a) unless the adjustment would require a
change of at least 1% of such price; provided, however, that any
adjustments which by reason of this subparagraph (viii) are not
required to be made shall be carried forward and taken into account in
any subsequent adjustment. All calculations shall be made to the
nearest cent (with .005 being rounded upward) or to the nearest 1/100th
of a share (with .005 of a share being rounded upward), as the case may
be. Notwithstanding anything to the contrary in this Article Five, the
Company from time to time may, to the extent permitted by law, reduce
the Conversion Price by any amount for any period of at least 20
Business Days, in which case the Company shall give at least 15 days'
notice of such reduction to the holders of Series 5.50% Debentures and
the Trustee. In addition, the Company may, at its option, make such
reductions in the Conversion Price in addition to those set forth in
this Article Five, as it considers to be advisable in order to avoid or
diminish any income tax to any holders of shares of Common Stock
resulting from any dividend or distribution of stock or issuance of
rights or warrants to purchase or subscribe for stock or from any event
treated as such for income tax purposes or for any other reasons.
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(ix) In any case in which this Article Five provides that an
adjustment shall become effective immediately after a record date for
an event, the Company may defer until the occurrence of such event (A)
issuing to the holder of any Series 5.50% Debentures converted after
such record date and before the occurrence of such event the additional
shares of Common Stock issuable upon such conversion by reason of the
adjustment required by such event over and above the Common Stock
issuable upon such conversion before giving effect to such adjustment
and (B) paying to such holder any amount in cash in lieu of any
fractional shares pursuant to this Article Five.
(x) For purposes of this Article Five, "COMMON STOCK" includes any
stock of any class of the Company which has no preference in respect of
dividends or of amounts payable in the event of any voluntary or
involuntary liquidation, dissolution or winding-up of the Company and
which is not subject to redemption by the Company. However, subject to
the provisions of this Article Five, shares issuable on conversion of
Series 5.50% Debentures shall include only shares of the class
designated as the Company Common Stock on the date of the initial
issuance of Series 5.50% Debentures by the Company or shares of any
class or classes resulting from any reclassification or
reclassification thereof and which have no preference in respect of
dividends or of amounts payable in the event of any voluntary or
involuntary liquidation, dissolution or winding-up of the Company and
which are not subject to redemption by the Company; provided, however,
that if at any time there shall be more than one such resulting class,
the shares of each such class then so issuable shall be substantially
in the proportion which the total number of shares of such class
resulting from all such reclassifications bears to the total number of
shares of all such classes resulting from all such reclassifications.
(b) Whenever the Conversion Price is adjusted as herein provided:
(i) the Company shall compute the adjusted Conversion Price and
shall prepare a certificate signed by the Chief Financial Officer or
the Treasurer of the Company setting forth the adjusted Conversion
Price and showing in reasonable detail the facts upon which such
adjustment is based, and such certificate shall forthwith be filed with
the Trustee and the transfer agent for the Preferred Securities and the
Series 5.50% Debentures; and
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(ii) a notice stating the Conversion Price has been adjusted and
setting forth the adjusted Conversion Price shall as soon as
practicable be mailed by the Company to all record holders of Preferred
Securities and the Series 5.50% Debentures at their last addresses as
they appear upon the stock transfer books of the Company and the Trust.
SECTION 5.04. (a) In the event that the Company shall be a party to any
transaction or series of transactions constituting a Fundamental Change,
including, without limitation, (i) any recapitalization or reclassification of
shares of Common Stock (other than a change in the par value or as a result of a
subdivision or combination of the Common Stock), (ii) any consolidation of the
Company with, or merger of the Company into, any other corporation or any merger
of another corporation into the Company as a result of which holders of Common
Stock shall be entitled to receive securities or other property or assets
(including cash) with respect to or in exchange for Common Stock (other than a
merger which does not result in a reclassification, conversion, exchange or
cancellation of outstanding shares of Common Stock), (iii) any sale or transfer
of all or substantially all of the assets of the Company, or (iv) any compulsory
share exchange, pursuant to any of which the holders of Common Stock shall be
entitled to receive other securities, cash or other property, then appropriate
provision shall be made as part of the terms of such transaction or series of
transactions so that the holder of each Series 5.50% Debenture then outstanding
shall have the right thereafter to convert such Series 5.50% Debenture only into
(A) if any such transaction does not constitute a Common Stock Fundamental
Change (as hereinafter defined), the kind and amount of the securities, cash or
other property that would have been receivable upon such recapitalization,
reclassification, consolidation, merger, sale, transfer or share exchange by a
holder of the number of shares of Common Stock into which such Series 5.50%
Debenture might have been converted immediately prior to such recapitalization,
reclassification, consolidation, merger, sale, transfer or share exchange,
after, in the case of a Non-Stock Fundamental Change (as hereinafter defined),
giving effect to any adjustment in the Conversion Price required by the
provisions which follow in subparagraph (i) of Section 5.04(c), and (B) if any
such transaction constitutes a Common Stock Fundamental Change, common stock of
the kind received by holders of Common Stock as a result of such Common Stock
Fundamental Change in an amount determined pursuant to the provisions which
follow in subparagraph (ii) of Section 5.04(c). The company formed by such
consolidation or resulting from such merger or which acquires such assets or
which acquires the Common Stock, as the case may be, shall enter into a
supplemental indenture with the Trustee, satisfactory in form to the Trustee,
the provisions of which establishes such right and provide for adjustments
which, for events subsequent to the effective date of such supplemental
indenture, shall be as nearly equivalent as may be practicable to the
adjustments provided for in this
Article Five. The above
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provisions shall similarly apply to successive recapitalization,
reclassifications, consolidations, mergers, sales, transfers or share exchanges.
(b) Notwithstanding any other provisions in this Article Five to the
contrary, if any Fundamental Change (as hereinafter defined) occurs, then the
Conversion Price in effect will be adjusted immediately following such
Fundamental Change as described below in Section 5.04(c). In addition, in the
event of a Common Stock Fundamental Change, each Series 5.50% Debenture shall be
convertible solely into common stock of the kind received by holders of Common
Stock as the result of such Common Stock Fundamental Change as more specifically
provided below in Section 5.04(c).
(c) For purposes of calculating any adjustment to be made pursuant to
this Article Five in the event of a Fundamental Change, immediately following
such Fundamental Change (and for such purposes a Fundamental Change shall be
deemed to occur on the earlier of (a) the occurrence of such Fundamental Change
and (b) the date, if any, fixed for determination of shareholders entitled to
receive the cash, securities, property or other assets distributable in such
Fundamental Change to holders of the Common Stock):
(i) in the case of a Non-Stock Fundamental Change, the Conversion
Price per share of Common Stock immediately following such Non-Stock
Fundamental Change shall be the lower of (A) the Conversion Price in
effect immediately prior to such Non-Stock Fundamental Change, but
after giving effect to any other adjustments effected pursuant to this
Article Five, and (B) the product of (1) the greater of the Applicable
Price (as hereinafter defined) or the then applicable Reference Market
Price (as hereinafter defined) and (2) a fraction the numerator of
which shall be $100 and the denominator of which shall be the amount
based on the date on which such Non-Stock Fundamental Change occurs.
For the twelve month period beginning October 29, 1997, the denominator
will be 105.50, and the denominator will decrease by 0.6875 during each
successive 12-month period; provided, that the denominator shall in no
event be less than 100.0.
(ii) in the case of a Common Stock Fundamental Change, the
Conversion Price per share of Common Stock immediately following the
Common Stock Fundamental Change shall be the Conversion Price in effect
immediately prior to such Common Stock Fundamental Change, but after
giving effect to any other adjustments effected pursuant to this
Article Five, multiplied by a fraction, the numerator of which is the
Purchaser Stock Price (as hereinafter defined) and the denominator of
which is the Applicable Price; provided, however, that in the event of
a
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Common Stock Fundamental Change in which (A) 100% of the value of the
consideration received by a holder of Common Stock is common stock of
the successor, acquiror or other third party (and cash, if any, paid
with respect to any fractional interests in such common stock resulting
from such Common Stock Fundamental Change) and (B) all of the Common
Stock shall have been exchanged for, converted into or acquired for
common stock (and cash, if any, with respect to fractional interests)
of the successor, acquiror or other third party, the Conversion Price
per share of Common Stock immediately following such Common Stock
Fundamental Change shall be the Conversion Price in effect immediately
prior to such Common Stock Fundamental Change divided by the number of
shares of common stock of the successor, acquiror, or other third party
received by a holder of one share of Common Stock as a result of such
Common Stock Fundamental Change.
(d) The following definitions shall apply to terms used in this
Article Five:
(i) "APPLICABLE PRICE" shall mean (A) in the event of a Non- Stock
Fundamental Change in which the holders of Common Stock receive only
cash, the amount of cash receivable by a holder of one share of Common
Stock and (B) in the event of any other Fundamental Change, the average
of the Closing Prices for one share of Common Stock during the ten
Trading Days immediately prior to the record date for the determination
of the holders of Common Stock entitled to receive cash, securities,
property or other assets in connection with such Fundamental Change or,
if there is no such record date, prior to the date upon which the
holders of Common Stock shall have the right to receive such cash,
securities, property or other assets.
(ii) "CLOSING PRICE" with respect to any securities on any day
shall mean the closing sale price, regular way, on such day or, in case
no such sale takes place on such day, the average of the reported
closing bid and asked prices, regular way, in each case on the New York
Stock Exchange or, if such security is not listed or admitted to
trading on such Exchange, on the principal national securities exchange
or quotation system on which such security is quoted or listed or
admitted to trading or, if not quoted or listed or admitted to trading
on any national securities exchange or quotation system, the average of
the closing bid and asked prices of such security on the
over-the-counter market on the date in question as reported by the
National Quotation Bureau Incorporated, or a similarly generally
accepted reporting service or, if not so available, in such manner as
furnished by any New York Stock Exchange member firm
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selected from time to time by the Board of Directors of the Company for
that purpose or a price determined in good faith by the Board of
Directors of the Company.
(iii) "COMMON STOCK FUNDAMENTAL CHANGE" shall mean any Fundamental
Change in which more than 50% of the value (as determined in good faith
by the Board of Directors of the Company) of the consideration received
by the holders of Common Stock pursuant to such transactions consists
of shares of common stock that, for the ten consecutive Trading Days
immediately prior to such Fundamental Change, has been admitted for
listing or admitted for listing subject to notice of issuance on a
national securities exchange or quoted on the Nasdaq National Market;
provided, however, that a Fundamental Change shall not be a Common
Stock Fundamental Change unless either (A) the Company continues to
exist after the occurrence of such Fundamental Change and the
outstanding Preferred Securities continue to exist as outstanding
Preferred Securities, or (B) the outstanding Preferred Securities
continue to exist as Preferred Securities and are convertible into
common stock of the successor to the Company.
(iv) "FUNDAMENTAL CHANGE" shall mean the occurrence of any
transaction or event or series of transactions or events pursuant to
which all or substantially all of the Common Stock shall be exchanged
for, converted into, acquired for or constitutes solely the right to
receive cash, securities, property or other assets (whether by means of
an exchange offer, liquidation, tender offer, consolidation, merger,
combination, reclassification, recapitalization or otherwise);
provided, however, in the case of a plan involving more than one such
transaction or event, for purposes of adjustment of the Conversion
Price, such Fundamental Change shall be deemed to have occurred when
substantially all of the Common Stock has been exchanged for, converted
into, or acquired for or constitutes solely the right to receive cash,
securities, property or other assets, but the adjustment shall be based
upon the consideration which the holders of Common Stock received in
such transaction or event as a result of which more than 50% of the
Common Stock shall have been exchanged for, converted into, or acquired
for or shall constitute solely the right to receive cash, securities,
property or other assets.
(v) "NON-STOCK FUNDAMENTAL CHANGE" shall mean any Fundamental
Change other than a Common Stock Fundamental Change.
(vi) "PURCHASER STOCK PRICE" shall mean, with respect to any
Common Stock Fundamental Change, the average of the Closing Prices
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for one share of the common stock received by holders of Common Stock
in such Common Stock Fundamental Change during the ten Trading Days
immediately prior to the record date for the determination of the
holders of Common Stock entitled to receive such common stock or, if
there is no such record date, prior to the date upon which the holders
of Common Stock shall have the right to receive such common stock.
(vii) "REFERENCE MARKET PRICE" shall initially mean $29.92 (which
is an amount equal to 66-2/3% of the last reported sale price for the
Common Stock on the New York Stock Exchange on October 23, 1997) and,
in the event of any adjustment to the Conversion Price other than as a
result of a Fundamental Change, the Reference Market Price shall also
be adjusted so that the ratio of the Reference Market Price to the
Conversion Price after giving effect to any such adjustment shall
always be the same as the ratio of the initial Reference Market Price
to the initial Conversion Price set forth in this Article Five.
(e) In determining the amount and type of consideration received by a
holder of Common Stock in the event of a Fundamental Change, consideration
received by a holder of Common Stock pursuant to a statutory right of appraisal
will be disregarded.
SECTION 5.05. In case:
(i) the Company shall declare a dividend (or any other
distribution) on Common Stock that would cause an adjustment to the
Conversion Price of the Series 5.50% Debentures pursuant to the terms
of any of the subparagraphs above (including such an adjustment that
would occur but for the terms of the first sentence of Section
5.03(a)(viii) above); or
(ii) the outstanding shares of Common Stock shall be subdivided
into a greater number of shares of Common Stock or combined into a
smaller number of shares of Common Stock; or
(iii) the Company shall authorize the granting to the holders of
Common Stock generally of rights or warrants (for a period expiring
within 45 days after the record date fixed for a distribution of such
rights and warrants) to subscribe for or purchase any shares of the
Company's capital stock or other capital stock of any class or of any
other rights (including any Rights Offerings); or
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(iv) of any reclassification of Common Stock (other than a
subdivision or combination of the outstanding shares of Common Stock),
or of any consolidation, merger or share exchange to which the Company
is a party and for which approval of any shareholders of the Company is
required, or of the sale or transfer of all or substantially all of the
assets of the Company or a compulsory share exchange; or
(v) of the voluntary or involuntary dissolution, liquidation or
winding-up of the Company;
then the Company shall (i) if any Preferred Securities are outstanding,
cause to be filed with the transfer agent for the Preferred Securities, and
shall cause to be mailed to the holders of record of the Preferred Securities,
at their last addresses as they shall appear upon the stock transfer books of
the Trust or (ii) shall cause to be mailed to all Holders at their last
addresses as they shall appear in the books and records of the Trust, at least
15 days prior to the applicable record or effective date hereinafter specified,
a notice stating (A) the date on which a record (if any) is to be taken for the
purpose of such dividend, distribution, rights or warrants or, if a record is
not to be taken, the date as of which the holders of Common Stock of record to
be entitled to such dividend, distribution, rights or warrants are to be
determined or (B) the date on which such reclassification, consolidation,
merger, sale, transfer, share exchange, dissolution, liquidation or winding up
is expected to become effective, and the date as of which it is expected that
holders of Common Stock of record shall be entitled to exchange their shares of
Common Stock for securities, cash or other property deliverable upon such
reclassification, consolidation, merger, sale, transfer, share exchange,
dissolution, liquidation or winding up (but no failure to mail such notice or
any defect therein or in the mailing thereof shall affect the validity of the
corporate action required to be specified in such notice).
SECTION 5.06. The Company shall reserve, free from pre-emptive rights,
out of its authorized but unissued shares, sufficient shares to provide for the
conversion of the Series 5.50% Debentures from time to time as such Series 5.50%
Debentures are presented for conversion, provided, that nothing contained herein
shall be construed to preclude the Company from satisfying its obligations in
respect of the conversion of Series 5.50% Debentures by delivery of repurchased
shares of Common Stock which are held in the treasury of the Company.
If any shares of Common Stock to be reserved for the purpose of
conversion of Series 5.50% Debentures hereunder require registration with or
approval of any governmental authority under any Federal or State law before
such shares may be validly issued or delivered upon conversion, then the
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Company covenants that it will in good faith and as expeditiously as possible
endeavor to secure such registration or approval, as the case may be, provided,
however, that nothing in this Section 5.06 shall be deemed to affect in any way
the obligations of the Company to convert Series 5.50% Debentures into Common
Stock as provided in this Article Five.
Before taking any action which would cause an adjustment reducing the
Conversion Price below the then par value, if any, of the Common Stock, the
Company will take all corporate action which may, in the Opinion of Counsel, be
necessary in order that the Company may validly and legally issue fully paid and
non-assessable shares of Common Stock at such adjusted Conversion Price.
The Company covenants that all shares of Common Stock which may be
issued upon conversion of Series 5.50% Debentures will upon issue be fully paid
and non-assessable by the Company and free of pre-emptive rights.
SECTION 5.07. Notwithstanding the foregoing provisions, the issuance of
any shares of Common Stock pursuant to any plan providing for the reinvestment
of dividends or interest payable on securities of the Company and the investment
of additional optional amounts in shares of Common Stock under any such plan,
and the issuance of any shares of Common Stock or options or rights to purchase
such shares pursuant to any employee benefit plan or program of the Company or
pursuant to any option, warrant, right or exercisable, exchangeable or
convertible security outstanding as of October 29, 1997, shall not be deemed to
constitute an issuance of Common Stock or exercisable, exchangeable or
convertible securities by the Company to which any of the adjustment provisions
described above applies. There shall also be no adjustment of the Conversion
Price in case of the issuance of any stock (or securities convertible into or
exchangeable for stock) of the Company except as specifically described in this
Article Five.
SECTION 5.08. In case the Company shall, by dividend or otherwise,
declare or make a distribution on the Common Stock referred to in Section
5.03(a)(iv) or 5.03(a)(v) (including, without limitation, dividends or
distributions referred to in the last sentence of Section 5.03(a)(vi)), the
Holder of the Series 5.50% Debenture, upon the conversion thereof subsequent to
the close of business on the date fixed for the determination of stockholders
entitled to receive such distribution and prior to the effectiveness of the
Conversion Price adjustment in respect of such distribution, shall also be
entitled to receive for each share of Common Stock into which the Series 5.50%
Debentures are converted, the portion of the shares of Common Stock, rights,
warrants, evidences of indebtedness, shares of capital stock, cash and assets so
distributed applicable to one share of Common Stock; provided, however, that, at
the election of the Company (whose election shall be evidenced by a resolution
of the Board of
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Directors) with respect to all Holders so converting, the Company may, in lieu
of distributing to such Holder any portion of such distribution not consisting
of cash or securities of the Company, pay such Holder an amount in cash equal to
the fair market value thereof (as determined in good faith by the Board of
Directors, whose determination shall be conclusive and described in a resolution
of the Board of Directors). If any conversion of Series 5.50% Debentures
described in the immediately preceding sentence occurs prior to the payment date
for a distribution to holders of Common Stock which the Holder of Series 5.50%
Debentures so converted is entitled to receive in accordance with the
immediately preceding sentence, the Company may elect (such election to be
evidenced by a resolution of the Board of Directors) to distribute to such
Holder a due bill for the shares of Common Stock, rights, warrants, evidences of
indebtedness, shares of capital stock, cash or assets to which such Holder is so
entitled, provided, that such due bill (a) meets any applicable requirements of
the principal national securities exchange or other market on which the Common
Stock is then traded and (b) requires payment or delivery of such shares of
Common Stock, rights, warrants, evidences of indebtedness, shares of capital
stock, cash or assets no later than the date of payment or delivery thereof to
holders of shares of Common Stock receiving such distribution.
ARTICLE 6
FORM OF SERIES 5.50% DEBENTURES
SECTION 6.01. The Series 5.50% Debentures and the Trustee's Certificate
of Authentication to be endorsed thereon are to be substantially in the
following forms:
(FORM OF FACE OF DEBENTURE)
[IF THE NOTE IS TO BE A GLOBAL DEBENTURE, INSERT - This Debenture is a
Global Debenture within the meaning of the Indenture hereinafter referred to and
is registered in the name of a Depositary or a nominee of a Depositary. This
Debenture is exchangeable for Debentures registered in the name of a person
other than the Depositary or its nominee only in the limited circumstances
described in the Indenture, and no transfer of this Debenture (other than a
transfer of this Debenture as a whole by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary) may be registered except in limited circumstances.
Unless this Debenture is presented by an authorized representative to
The Depository Trust Company (55 Water Street, New York, New York) to the issuer
or its agent for registration of transfer, exchange or payment, and any
Debenture issued is registered in the name of Cede & Co. or such other name as
requested by
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an authorized representative of The Depository Trust Company and any payment
hereon is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE
OR OTHERWISE BY A PERSON IS WRONGFUL since the registered owner hereof, Cede &
Co., has an interest herein.]
[IF THE DEBENTURE IS TO BE A DEFINITIVE CERTIFICATE ISSUED TO AN
INSTITUTIONAL ACCREDITED INVESTOR ATTACH "ACCREDITED INVESTOR LETTER" IN THE
FORM ATTACHED HERETO]
No. $
CUSIP NO. ____________
THE AES CORPORATION
5.50% JUNIOR SUBORDINATED DEBENTURE
DUE 2012
[If prior to the Transfer Restriction Termination Date or sale pursuant
to an effective registration statement or Rule 144, add legend from Section 1.04
of this Second Supplemental Indenture].
The AES Corporation, a corporation duly organized and existing under
the laws of the State of Delaware (herein referred to as the "COMPANY", which
term includes any successor corporation under the Indenture hereinafter referred
to), for value received, hereby promises to pay to , or registered assigns, the
principal sum of $___________ on September 30, 2012, and to pay interest on said
principal sum from October 29, 1997 or from the most recent interest payment
date (each such date, an "INTEREST PAYMENT DATE") to which interest has been
paid or duly provided for, quarterly (subject to deferral as set forth herein)
in arrears commencing December 31, 1997 at the rate of 5.50% per annum plus
Compounded Interest, if any, until the principal hereof shall have become due
and payable, and on any overdue principal and premium, if any, and (without
duplication and to the extent that payment of such interest is enforceable under
applicable law) on any overdue installment of interest at the same rate per
annum. The amount of interest payable on any Interest Payment Date shall be
computed on the basis of a 360-day year twelve 30-day months. In the event that
any date on which interest is payable on this Debenture is not a business day,
then payment of interest payable on such date will be made on the next
succeeding day which is a business day (and without any interest or other
payment in respect of any such delay), except that, if such business day is in
the next succeeding calendar year,
36
<PAGE>
such payment shall be made on the immediately preceding business day, in each
case with the same force and effect as if made on such date. The interest
installment so payable, and punctually paid or duly provided for, on any
Interest Payment Date will, as provided in the Indenture, be paid to the person
in whose name this Debenture (or one or more Predecessor Debentures, as defined
in said Indenture) is registered at the close of business on the regular record
date for such interest installment, [which shall be the close of business on the
day next preceding such Interest Payment Date, provided if the Preferred
Securities of AES Trust II are no longer in book-entry only form, the regular
record dates shall be the close of business on the fifteenth (15th) day of the
month in which such Interest Payment Date occurs] [IF PURSUANT TO THE PROVISIONS
OF SECTION 2.11(c) OF THE INDENTURE OR SECTION 1.04 OF THE SECOND SUPPLEMENTAL
INDENTURE THE SERIES 5.50% DEBENTURES ARE NOT REPRESENTED BY A GLOBAL DEBENTURE
- -- which shall be the close of business on the fifteenth (15th) day of the month
in which such Interest Payment Date occurs.] Any such interest installment not
punctually paid or duly provided for shall forthwith cease to be payable to the
registered holders on such regular record date, and may be paid to the person in
whose name this Debenture (or one or more Predecessor Debentures) is registered
at the close of business on a special record date to be fixed by the Trustee for
the payment of such defaulted interest, notice whereof shall be given to the
registered holders of this series of Debentures not less than 10 days prior to
such special record date, or may be paid at any time in any other lawful manner
not inconsistent with the requirements of any securities exchange on which the
Debentures may be listed, and upon such notice as may be required by such
exchange, all as more fully provided in the Indenture. The principal of (and
premium, if any) and the interest on this Debenture shall be payable at the
office or agency of the Company maintained for that purpose in the Borough of
Manhattan, The City and State of New York, in any coin or currency of the United
States of America which at the time of payment is legal tender for payment of
public and private debts; provided, however, that payment of interest may be
made at the option of the Company by check mailed to the registered holder at
such address as shall appear in the Debenture register and that the payment of
principal will only be made upon the surrender of this Debenture to the Trustee.
Notwithstanding the foregoing, so long as the owner and record holder of this
Debenture is the Property Trustee (as defined in the Indenture referred to on
the reverse hereof), the payment of the principal of (and premium, if any) and
interest (including Compounded Interest, if any) on this Debenture will be made
at such place and to such account of the Property Trustee as may be designated
by the Property Trustee.
The indebtedness evidenced by this Debenture is, to the extent provided
in the Indenture, subordinate and subject in right of payment to the prior
payment in full of all Senior and Subordinated Debt, and this Debenture is
issued subject to
37
<PAGE>
the provisions of the Indenture with respect thereto. Each Holder of this
Debenture, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee on his behalf to take such
action as may be necessary or appropriate to acknowledge or effectuate the
subordination so provided and (c) appoints the Trustee his attorney-in-fact for
any and all such purposes. Each Holder hereof, by his acceptance hereof, hereby
waives all notice of the acceptance of the subordination provisions contained
herein and in the Indenture by each holder of Senior and Subordinated Debt,
whether now outstanding or hereafter incurred, and waives reliance by each such
Holder upon said provisions.
This Debenture shall not be entitled to any benefit under the Indenture
hereinafter referred to, be valid or become obligatory for any purpose until the
Certificate of Authentication hereon shall have been signed by or on behalf of
the Trustee.
The provisions of this Debenture are continued on the reverse side
hereof and such continued provisions shall for all purposes have the same effect
as though fully set forth at this place.
IN WITNESS WHEREOF, the Company has caused this Instrument to be
executed.
Dated:
------------------------------------
The AES Corporation
By:
---------------------------------
Attest:
By:
--------------------------------------
Secretary
38
<PAGE>
CERTIFICATE OF AUTHENTICATION
This is one of the Debentures of the series of Debentures described in
the within-mentioned Indenture.
THE FIRST NATIONAL BANK OF
CHICAGO
as Trustee or as Authentication Agent
By By
-------------------------------- -----------------------------
Authorized Signatory Authorized Signatory
39
<PAGE>
(FORM OF REVERSE OF DEBENTURE)
This Debenture is one of a duly authorized series of Debentures of the
Company (herein sometimes referred to as the "DEBENTURES"), specified in the
Indenture, all issued or to be issued in one or more series under and pursuant
to an Indenture dated as of March 1, 1997 duly executed and delivered between
the Company and The First National Bank of Chicago, a national banking
association, as Trustee (herein referred to as the "TRUSTEE"), as supplemented
by the Second Supplemental Indenture dated as of October 29, 1997 between the
Company and the Trustee (said Indenture as so supplemented being hereinafter
referred to as the "INDENTURE"), to which Indenture and all indentures
supplemental thereto reference is hereby made for a description of the rights,
limitations of rights, obligations, duties and immunities thereunder of the
Trustee, the Company and the holders of the Debentures, and, to the extent
specifically set forth in the Indenture, the holders of Senior and Subordinated
Debt and Preferred Securities. By the terms of the Indenture, the Debentures are
issuable in series which may vary as to amount, date of maturity, rate of
interest and in other respects as in the Indenture provided. This series of
Debentures is designated the 5.50% Junior Subordinated Debentures due 2012 and
is limited in aggregate principal amount as specified in said Second
Supplemental Indenture.
Except as provided in the next paragraph, the Debentures may not be
redeemed by the Company prior to September 30, 2000. The Company shall have the
right to redeem this Debenture at the option of the Company, without premium or
penalty, in whole or in part at any time on or after September 30, 2000 (an
"OPTIONAL REDEMPTION"), upon not less than 30 nor move than 60 days notice to
the Holder of the Series 5.50% Debentures, at the following prices (as expressed
as percentages of the principal amount of the Debentures) (the "OPTIONAL
REDEMPTION PRICE"), together with any accrued but unpaid interest, including any
Compounded Interest, if any, to, but including, the date of such redemption, if
redeemed during the 12-month period beginning September 30:
YEAR REDEMPTION PRICE
---- ----------------
2000 103.438%
2001 102.750%
2002 102.063%
2003 101.375%
2004 100.688%
and 100% if redeemed on or after September 30, 2005.
40
<PAGE>
If the Series 5.50% Debentures are redeemed on any Interest Payment
Date, accrued and unpaid interest shall be payable to Holders of record on the
relevant record date.
The Company may not redeem any Series 5.50% Debentures unless all
accrued and unpaid interest thereon, including Compounded Interest, if any, has
been paid for all quarterly periods terminating on or prior to the date of
notice of redemption. So long as the corresponding Preferred Securities are
outstanding, the proceeds from the redemption of the Series 5.50% Debentures
will be used to redeem the Preferred Securities.
If the Debentures are only partially redeemed by the Company pursuant
to an Optional Redemption, the Debentures will be redeemed pro rata or by lot or
by any other method utilized by the Trustee; provided if, at the time of
redemption, the Debentures are registered as a Global Debenture, the Depository
shall determine the principal amount of such Debentures held by each holder of
Debentures to be redeemed in accordance with its customary procedures.
If, at any time, a Tax Event (as defined below) shall occur or be
continuing after receipt of a Dissolution Tax Opinion (as defined below) and (i)
the Regular Trustees and the Company shall have received an opinion (a
"REDEMPTION TAX OPINION") of a nationally recognized independent tax counsel
experienced in such matters that, as a result of a Tax Event, there is more than
an insubstantial risk that the Company would be precluded from deducting the
interest on the Debentures for United States federal income tax purposes even if
the Debentures were distributed to the holders of Preferred Securities and
Common Securities in liquidation of such holder's interest in AES Trust II as
set forth in the Declaration of Trust or (ii) the Regular Trustees shall have
been informed by such tax counsel that a No Recognition Opinion (as defined
below) cannot be delivered to AES Trust II, the Company shall have the right at
any time, upon not less than 30 nor more than 60 days' notice, to redeem the
Debentures in whole or in part for cash at a price equal to 100% of the
principal amount thereof, together with any accrued and unpaid interest thereon,
including Compounded Interest if any, to, but excluding the date of redemption,
within 90 days following the occurrence of such Tax Event; provided, however,
that, if at the time there is available to the Company or the Regular Trustees
on behalf of AES Trust II the opportunity to eliminate, within such 90 day
period, the Tax Event by taking some ministerial action ("MINISTERIAL ACTION"),
such as filing a form or making an election, or pursuing some other similar
reasonable measure, which has no adverse effect on AES Trust II, the Company or
the holders of the Preferred Securities, the Company or the Regular Trustees on
behalf of AES Trust II will pursue such measure in lieu of redemption and
provided further that the Company shall have
41
<PAGE>
no right to redeem the Debentures while the Regular Trustees on behalf of AES
Trust II are pursuing any such Ministerial Action.
"TAX EVENT" means that the Company and the Regular Trustees shall have
obtained an opinion of nationally recognized independent tax counsel experienced
in such matters (a "DISSOLUTION TAX OPINION") to the effect that on or after
October 23, 1997, as a result of (a) any amendment to, or change in, the laws
(or any regulations thereunder) of the United States or any political
subdivision or taxing authority thereof or therein, (b) any amendment to, or
change in, an interpretation or application of any such laws or regulations by
any legislative body, court, governmental agency or regulatory authority
(including the enactment of any legislation and the publication of any judicial
decision or regulatory determination), (c) any interpretation or pronouncement
that provides for a position with respect to such laws or regulations that
differs from the theretofore generally accepted position or (d) any action taken
by any governmental agency or regulatory authority, which amendment or change is
enacted, promulgated, issued or effective or which interpretation or
pronouncement is issued or announced or which action is taken, in each case on
or after October 23, 1997, there is more than an insubstantial risk that (i) AES
Trust II is, or will be within 90 days of the date thereof, subject to United
States federal income tax with respect to income accrued or received on the
Debentures, (ii) AES Trust II is, or will be within 90 days of the date thereof,
subject to more than a de minimis amount of taxes, duties or other governmental
charges or (iii) interest payable by the Company to AES Trust II on the
Debentures is not, or within 90 days of the date thereof will not be, deductible
by the Company for United States federal income tax purposes.
"NO RECOGNITION OPINION" means an opinion of a nationally recognized
independent tax counsel experienced in such matters, which opinion may rely on
any then applicable published revenue ruling of the Internal Revenue Service, to
the effect that the holders of the Preferred Securities will not recognize any
gain or loss for United States federal income tax purposes as a result of a
dissolution of AES Trust II and distribution of the Debentures as provided in
the Declaration of Trust.
If the Debentures are only partially redeemed by the Company pursuant
to an Optional Redemption or as a result of a Tax Event as described above, the
Debentures will be redeemed pro rata or by lot or in some other equitable manner
determined by the Trustee. Notwithstanding the foregoing, if a partial
redemption of the Debentures would result in the delisting of the Preferred
Securities by any national securities exchange or other organization on which
the Preferred Securities are then listed, the Company shall not be permitted to
effect such partial redemption and will only redeem the Debentures in whole.
42
<PAGE>
In the event of redemption of this Debenture in part only, a new
Debenture or Debentures of this series for unredeemed portion hereof will be
issued in the name of the Holder hereof upon the cancellation hereof.
In case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of all of the Debentures may be
declared, and upon such declaration shall become, due and payable, in the
manner, with the effect and subject to the conditions provided in the Indenture.
The Indenture contains provisions for defeasance at any time of the
entire indebtedness of this Debenture upon compliance by the Company with
certain conditions set forth therein.
The Indenture contains provisions permitting the Company and the
Trustee, with the consent of the Holders of not less than a majority in
aggregate principal amount of the Debentures of each series affected at the time
outstanding, as defined in the Indenture (and, in the case of any series of
Debentures held as trust assets of an AES Trust and with respect to which a
Security Exchange has not theretofore occurred, such consent of holders of the
Preferred Securities and the Common Securities of such AES Trust) as may be
required under the Declaration of Trust of such AES Trust to execute
supplemental indentures for the purpose of adding any provisions to or changing
in any manner or eliminating any of the provisions of the Indenture or of any
supplemental indenture or of modifying in any manner the rights of the Holders
of the Debentures; provided, however, that no such supplemental indenture shall
(i) extend the fixed maturity of any Debentures of any series, or reduce the
principal amount thereof, or reduce the rate or extend the time of payment of
interest thereon, or reduce any premium payable upon the redemption thereof,
without the consent of the holder of each Debenture so affected or (ii) reduce
the aforesaid percentage of Debentures, the holders of which are required to
consent to any such supplemental indenture, without the consent of the holders
of each Debenture (and, in the case of any series of Debentures held as trust
assets of an AES Trust and with respect to which a Security Exchange has not
theretofore occurred, such consent of the holders of the Preferred Securities
and the Common Securities of such AES Trust as may be required under the
Declaration of Trust of such AES Trust) then outstanding and affected thereby.
The Indenture also contains provisions permitting the Holders of a majority in
aggregate principal amount of the Debentures of a series at the time outstanding
affected thereby (subject, in the case of any series of Debentures held as trust
assets of an AES Trust and with respect to which a Securities Exchange has not
theretofore occurred, to such consent of holders of Preferred Securities and
Common Securities of such AES Trust as may be required under the Declaration of
Trust of such AES Trust), on behalf of the Holders of the Debentures of such
series, to waive any past default in the
43
<PAGE>
performance of any of the covenants contained in the Indenture, or established
pursuant to the Indenture with respect to such series, and its consequences,
except a default in the payment of the principal of or premium, if any, or
interest on any of the Debentures of such series. Any such consent or waiver by
the registered Holder of this Debenture (unless revoked as provided in the
Indenture) shall be conclusive and binding upon such Holder and upon all future
Holders and owners of this Debenture and of any Debenture issued in exchange
herefor or in place hereof (whether by registration of transfer or otherwise),
irrespective of whether or not any notation of such consent or waiver is made
upon this Debenture.
Subject to Section 13.12 of the Indenture, no reference herein to the
Indenture (other than such Section) and no provision of this Debenture or of the
Indenture shall alter or impair the obligation of the Company, which is absolute
and unconditional, to pay the principal of and premium, if any, and interest on
this Debenture at the time and place at the rate and in the money herein
prescribed.
So long as the Company is not in default in the payment of interest on
the Debentures, the Company shall have the right, at any time during the term of
the Debentures, from time to time to extend the interest payment period of such
Debentures for up to 20 consecutive quarterly interest periods (the "EXTENDED
INTEREST PAYMENT PERIOD"), at the end of which period the Company shall pay all
interest then accrued and unpaid (together with interest thereon at the rate of
5.50% per annum to the extent permitted by applicable law, compounded quarterly
("COMPOUNDED INTEREST")); provided that no Extended Interest Payment Period may
extend beyond the date of maturity or any redemption date of the Debentures.
During such Extended Interest Payment Period the Company shall not declare or
pay any dividend on, or redeem, purchase, acquire or make a distribution or
liquidation payment with respect to, any of its common stock or preferred stock,
or make any guarantee payments with respect thereto, provided that the foregoing
will not apply to any stock dividends, paid by the Company in Common Stock.
Prior to the termination of any such Extended Interest Payment Period, the
Company may pay all or any portion of the interest accrued on the Debentures on
any Interest Payment Date to holders of record on the regular record date for
such Interest Payment Date or from time to time further extend such Extended
Interest Payment Period, provided that such Period together with all such
further extensions thereof shall not exceed 20 consecutive quarterly interest
periods. At the termination of any such Extended Interest Payment Period and
upon the payment of all accrued and unpaid interest then due, together with
Compounded Interest, the Company may select a new Extended Interest Payment
Period, subject to the foregoing requirements. No interest on this Debenture
shall be due and payable during an Extended Interest Payment Period, except at
the end thereof. At the end of the Extended Interest Payment Period the Company
shall pay all interest accrued and unpaid on the Debentures including any
Compounded
44
<PAGE>
Interest which shall be payable to the holders of the Debentures in whose names
the Debentures are registered in the Debenture register on the first record date
after the end of the Extended Interest Payment Period.
As provided in the Indenture and subject to certain limitations therein
set forth, this Debenture is transferable by the registered holder hereof on the
Debenture register of the Company, upon surrender of this Debenture for
registration of transfer at the office or agency of the Company in the Borough
of Manhattan, The City and State of New York accompanied by a written instrument
or instruments of transfer in form satisfactory to the Company or the Trustee
duly executed by the registered holder hereof or his attorney duly authorized in
writing, and thereupon one or more new Debentures of authorized denominations
and for the same aggregate principal amount and series will be issued to the
designated transferee or transferees. No service charge will be made for any
such transfer, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in relation thereto.
Prior to due presentment for registration of transfer of this
Debenture, the Company, the Trustee, any paying agent and any Debenture
Registrar may deem and treat the registered holder hereof as the absolute owner
hereof (whether or not this Debenture shall be overdue and notwithstanding any
notice of ownership or writing hereon made by anyone other than the Debenture
Registrar) for the purpose of receiving payment of or on account of the
principal hereof and premium, if any, and interest due hereon and for all other
purposes, and neither the Company nor the Trustee nor any paying agent nor any
Debenture Registrar shall be affected by any notice to the contrary.
No recourse shall be had for the payment of the principal of or the
interest on this Debenture, or for any claim based hereon, or otherwise in
respect hereof, or based on or in respect of the Indenture, against any
incorporator, stockholder, officer or director, past, present or future, as
such, of the Company or of any predecessor or successor corporation, whether by
virtue of any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise, all such liability being, by the acceptance
hereof and as part of the consideration for the issuance hereof, expressly
waived and released.
The Holder of any Debenture has the right, exercisable at any time
through the close of business (New York time) on September 30, 2012 (or, in the
case of a Debenture called for redemption, prior to the close of business on the
Business Day prior to the corresponding redemption date), to convert the
principal amount thereof (or any portion thereof that is an integral multiple of
$50) into shares of Common Stock at the initial conversion rate of 0.8914 shares
of Common Stock
45
<PAGE>
for each Debenture (equivalent to a Conversion Price of $56.09 per share of
Common Stock), subject to adjustment under certain circumstances.
To convert a Debenture, a Holder must (a) complete and sign a
conversion notice substantially in the form attached hereto, (b) surrender the
Debenture to a Conversion Agent, (c) furnish appropriate endorsements or
transfer documents if required by the Conversion Agent and (d) pay any transfer
or similar tax, if required. If a Debenture is surrendered for conversion after
the close of business on any regular record date for payment of a Distribution
and before the opening of business on the corresponding Distribution payment
date, then, notwithstanding such conversion, the Distribution payable on such
Distribution payment date will be paid in cash to the person in whose name the
Debenture is registered at the close of business on such record date, and (other
than a Debenture or a portion of a Debenture called for redemption on a
redemption date occurring after such record date and on or prior to such
Distribution payment date) when so surrendered for conversion, the Debenture
must be accompanied by payment of an amount equal to the Distribution payable on
such Distribution payment date. The number of shares issuable upon conversion of
a Debenture is determined by dividing the principal amount of the Debenture
converted by the Conversion Price in effect on the Conversion Date. No
fractional shares will be issued upon conversion but a cash adjustment will be
made for any fractional interest. The outstanding principal amount of any
Debenture shall be reduced by the portion of the principal amount thereof
converted into shares of Common Stock.
[If CERTIFICATED DEBENTURES -- The Debentures of this series are
issuable only in registered form without coupons in denominations of $50 and any
integral multiple thereto.] [If GLOBAL DEBENTURE -- This Global Debenture is
exchangeable for Debentures in definitive form under certain limited
circumstances set forth in the Indenture. Debentures of this series so issued
are issuable only in registered form without coupons in denominations of $50 or
any integral multiple thereof.] As provided in the Indenture and subject to
certain limitations [If GLOBAL DEBENTURE -- herein and] therein set forth,
Debentures of this series [If GLOBAL DEBENTURE -- so issued] are exchangeable
for a like aggregate principal amount of Debentures of this series of a
different authorized denomination, as requested by the Holder surrendering the
same.
All terms used in this Debenture which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
46
<PAGE>
[FORM OF ELECTION TO CONVERT]
ELECTION TO CONVERT
To: The AES Corporation
The undersigned owner of this Debenture hereby irrevocably exercises
the option to convert this Debenture, or the portion below designated, into
Common Stock of THE AES CORPORATION, in accordance with the terms of the
Indenture referred to in this Debenture, and directs that the shares issuable
and deliverable upon conversion, together with any check in payment for
fractional shares, be issued in the name of and delivered to the undersigned,
unless a different name has been indicated in the assignment below. If shares
are to be issued in the name of a person other than the undersigned, the
undersigned will pay all transfer taxes payable with respect thereto.
Date: _________, ____
in whole Portions of Debenture to be converted ($50
or integral multiples thereof):
$__________
-------------------------------
Signature (for conversion only)
Please Print or Typewrite Name and
Address, Including Zip Code, and Social
Security or Other Identifying Number
----------------------
----------------------
----------------------
Signature Guarantee:1____
- -------------------
1 Signature must be guaranteed by an "eligible guarantor institution" that is
a bank, stockbroker, savings and loan association or credit union meeting
the requirements of the Conversion Agent, which requirements include
membership of participation in the Securities Transfer Agents Medallion
Program ("STAMP") or such other "signature guarantee program" as may be
determined by the Conversion Agent in addition to, or in substitution for,
STAMP, all in accordance with the Securities and Exchange Act of 1934, as
amended.
47
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Debenture to:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Insert assignee's social security or tax identification number)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Insert address and zip code of assignee)
and irrevocably appoints _______________________________________________________
- --------------------------------------------------------------------------------
___________________________________________________ agent to transfer
this Debenture on the books of the Trust. The agent may substitute another to
act for him or her.
Date:_______________________________________
Signature:_________________________________________
(Sign exactly as your name appears on the other side of this Debenture)
Signature
Guarantee2:_________________________________________________
- -------------------
2 Signature must be guaranteed by an "eligible guarantor institution" that is
a bank, stockbroker, savings and loan association or credit union meeting
the requirements of the Conversion Agent, which requirements include
membership of participation in the Securities Transfer Agents Medallion
Program ("STAMP") or such other "signature guarantee program" as may be
determined by the Conversion Agent in addition to, or in substitution for,
STAMP, all in accordance with the Securities and Exchange Act of 1934, as
amended.
48
<PAGE>
FORM OF CERTIFICATE TO BE DELIVERED
IN CONNECTION WITH (I) TRANSFERS OF INTERESTS IN THE
TEMPORARY REGULATION S GLOBAL DEBENTURE AND
(II) TRANSFERS OF INTEREST TO NON-U.S. PERSONS
The First National Bank of Chicago
One First National Plaza, Suite 0126
Chicago, Illinois 60670-0126
Attention: Corporate Trust Administration
Re: The AES Corporation (the "Company")
Series 5.50% Debentures
Dear Sirs or Mesdames:
In connection with our proposed sale of the number of Series 5.50%
Debentures designated below, the undersigned owner confirms that such sale has
been effected pursuant to and in accordance with Regulation S under the
Securities Act of 1933, as amended, and, accordingly, represents that:
(1) the offer of the Series 5.50% Debentures was not made to a person
in the United States;
(2) at the time the buy order was originated, the transferee was
outside the United States or we and any person acting on our behalf reasonably
believed that the transferee was outside the United States;
(3) no directed selling efforts have been made by us in the United
States in contravention of the requirements of Rule 903(b) or Rule 904(b) of
Regulation S, as applicable; and
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the U.S. Securities Act of 1933.
49
<PAGE>
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this certificate have the
meanings set forth in Regulation S.
Date: ___________, ____
Very truly yours,
[Name of Transferor]
By:
----------------------
Authorized Signature
Number of Series 5.50% Debentures to
be sold:
------------------------
Please Print or Typewrite Name and
Address, Including Zip Code, and
Social Security or Other Identifying
Number:
------------------------
------------------------
------------------------
50
<PAGE>
ACCREDITED INVESTOR LETTER
, 199
The First National Bank of
Chicago
One First National Plaza
Chicago, Illinois 60670-0126
Dear Sirs:
In connection with our proposed transfer of 5.50% Junior Subordinated
Debentures due 2012 described below (the "Debentures") of The AES Corporation
(the "Issuer"), we confirm that:
1. We have received a copy of the Offering Memorandum (the "Offering
Memorandum"), dated October 24, 1997, relating to the Debentures
and the undersigned agrees to be bound by, and not to resell,
pledge or otherwise transfer the Debentures except in compliance
with, such restrictions and conditions and the Securities Act of
1933, as amended (the "Securities Act").
2. We understand that any subsequent transfer of the Debentures is
subject to certain restrictions and conditions set forth in the
Indenture as amended by the second supplemental indenture relating
to the Debentures and the undersigned agrees to be bound by, and
not to resell, pledge or otherwise transfer the Debentures except
in compliance with, such restrictions and conditions and the
Securities Act of 1933, as amended (the "Securities Act").
3. We understand that the offer and the sale of the Debentures has
not been registered under the Securities Act, and that the
Debentures may not be offered or sold except as permitted in the
following sentence. We agree, on our own behalf and on behalf of
any accounts for which we are acting as hereinafter stated, that
if we should sell any Debentures or Common Stock (together, the
"Securities") prior to the expiration of the holding period
applicable to sales of the security evidenced hereby under Rule
144(k) under the Securities Act (or any successor provision), we
will do so only (A) to The AES Corporation (the "Company") or any
subsidiary thereof, (B) inside the United States in accordance
with Rule 144A under the Securities Act to a
51
<PAGE>
"qualified institutional buyer" (as defined therein), (C) inside
the United States to an institutional "accredited investor" (as
defined below) that, prior to such transfer, furnishes to the
Trustee a signed letter containing certain representations and
agreements relating to the restrictions on transfer of the
Debenture (the form of which letter can be obtained from the
Trustee) and, if such transfer is in respect of Debenture with an
aggregate liquidation preference of less than $250,000, an opinion
of counsel acceptable to the Company that such transfer is in
compliance with the Securities Act, (D) outside the United States
in accordance with the Rule 904 under the Securities Act (E)
pursuant to the exemption from registration provided by Rule 144
under the Securities Act (if available) or (F) pursuant to an
effective registration statement under the Securities Act, and we
further agree to provide to any person purchasing any of the
Debenture from us a notice advising such purchaser that resales of
the Debenture are restricted as stated herein.
4. We understand that, on any proposed resale of any Securities, we
will be required to furnish to the Issuer and the Trustee such
certifications, legal opinions and other information as the Issuer
and the Trustee may reasonably require to confirm that the
proposed sale complies with the foregoing restrictions. We further
understand that the Securities purchased by us will bear a legend
to the foregoing effect.
5. We are a institutional "accredited investor" (as defined in rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities
Act) and have such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and
risks of our investment in the Preferred Securities, and we and
any accounts for which we are acting are each able to bear the
economic risks of our or their investment.
6. We are acquiring the Debenture purchased by us for our own account
for one or more accounts (each of which is an institutional
"accredited investor") as to each of which we exercise sole
investment discretion.
The Issuer and the Trustee are entitled to rely upon this letter and
are irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby.
52
<PAGE>
Very truly yours,
By:
------------------------
Name:
Title:
53
<PAGE>
ARTICLE 7
ORIGINAL ISSUE OF SERIES 5.50% DEBENTURES
SECTION 7.01. Except as provided in Section 1.01 and this Section 7.01,
Series 5.50% Debentures in the aggregate principal amount equal to $309,278,400
may, upon execution of this Second Supplemental Indenture, be executed by the
Company and delivered to the Trustee for authentication, and the Trustee shall
thereupon authenticate and make available for delivery said Debentures to or
upon the written order of the Company, signed by its Chairman, its President, or
any Vice President and its Treasurer or an Assistant Treasurer, without any
further action by the Company. Upon exercise of the overallotment option set
forth in the Underwriting Agreement, additional Series 5.50% Debentures in the
aggregate principal amount of up to $46,391,800 may be executed by the Company
and delivered to the Trustee for authentication, and the Trustee shall thereupon
authenticate and make available for delivery said Series 5.50% Debentures
executed as aforesaid by the Company, to or upon the written order of the
Company, which order shall be accompanied by evidence satisfactory to the
Trustee that the overallotment option has been exercised.
ARTICLE 8
MISCELLANEOUS PROVISIONS
SECTION 8.01. Except as otherwise expressly provided in this Second
Supplemental Indenture or in the form of Series 5.50% Debenture or otherwise
clearly required by the context hereof or thereof, all terms used herein or in
said form of Series 5.50% Debenture that are defined in the Indenture shall have
the several meanings respectively assigned to them thereby.
SECTION 8.02. The Indenture, as supplemented by this Second
Supplemental Indenture, is in all respects ratified and confirmed. This Second
Supplemental Indenture shall be deemed part of the Indenture in the manner and
to the extent herein and therein provided.
SECTION 8.03. The recitals herein contained are made by the Company and
not by the Trustee, and the Trustee assumes no responsibility for the
correctness thereof. The Trustee makes no representation as to the validity or
sufficiency of this Second Supplemental Indenture.
SECTION 8.04. This Second Supplemental Indenture may be executed in any
number of counterparts each of which shall be an original; but such counterparts
shall together constitute but one and the same instrument.
54
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Second
Supplemental Indenture to be duly executed, and their respective corporate seals
to be hereunto affixed and attested, on the date or dates indicated in the
acknowledgments and as of the day and year first above written.
THE AES CORPORATION
By:
--------------------------------
Name:
Title:
Attest:
- ---------------------------------------
Name:
Title:
THE FIRST NATIONAL BANK OF
CHICAGO, as Trustee
By:
--------------------------------
Name:
Title:
Attest:
- ---------------------------------------
Name:
Title:
55
EXHIBIT 4.2
REGISTRATION RIGHTS AGREEMENT
Dated as of October 29, 1997
among
THE AES CORPORATION
AES TRUST II
and
J.P. MORGAN SECURITIES INC.,
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
and
UNTERBERG HARRIS
<PAGE>
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is dated as of
October 29, 1997, by and among THE AES CORPORATION, a Delaware corporation (the
"Company"), AES Trust II, a statutory business trust organized under the
Business Trust Act of the State of Delaware (the "Trust") and J.P. MORGAN
SECURITIES INC., DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION and
UNTERBERG HARRIS, L.P. (collectively, the "Initial Purchasers").
This Agreement is entered into in connection with the Purchase
Agreement, dated as of October 23, 1997, among the Company, the Trust and the
Initial Purchasers (the "Purchase Agreement") relating to the sale by the Trust
to the Initial Purchasers, severally, of up to 6,900,000 shares of its $2.75
Term Convertible Securities, Series B ("TECONS"). The TECONS are convertible
into shares of common stock, par value $.01 per share, of the Company (such
shares, the "Common Stock"). In order to induce the Initial Purchasers to enter
into the Purchase Agreement, each of the Company and the Trust has agreed to
provide the registration rights set forth in this Agreement for the equal
benefit of the Initial Purchasers and their direct and indirect transferees. The
execution and delivery of this Agreement is a condition to the Initial
Purchasers' obligation to purchase the TECONS under the Purchase Agreement.
The parties hereby agree as follows:
1. Definitions
As used in this Agreement, the following terms shall have the following
meanings:
Advice: See Section 4.
Closing Date: The Closing Date as defined in the Purchase Agreement.
Common Stock: See the introductory paragraph to this Agreement.
Company: See the introductory paragraph to this Agreement.
<PAGE>
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Declaration: The Declaration of Trust among the Trustees and the Trust.
DTC: See Section 4(a).
Effectiveness Date: The 180th day after the Closing Date.
Effectiveness Period: See Section 2(a).
Event Date: See Section 3(b).
Exchange Act: The Securities Exchange Act of 1934, as amended, and the
rules and regulations of the SEC promulgated thereunder.
Filing Date: The 90th day after the Closing Date.
Holder: Any record holder of Registrable Securities.
Guarantee: The Guarantee by the Company of certain payments to be made
by the Trust in accordance with the Guarantee Agreement.
Guarantee Agreement: The Guarantee Agreement, dated October 29, 1997,
executed and delivered by the Company for the benefit of the Holders as amended
or supplemented from time to time in accordance with the terms thereof.
Indemnified Person: See Section 6.
Indemnifying Person: See Section 6.
Indenture: The Indenture, dated as of October 29, 1997, between the
Company and the First National Bank of Chicago, as trustee, pursuant to which
the Junior Subordinated Debentures are being issued, as amended or supplemented
from time to time in accordance with the terms thereof.
Initial Purchasers: See the introductory paragraph to this Agreement.
Initial Shelf Registration: See Section 2(a).
Issue Date: The original issue date of the TECONS.
<PAGE>
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Junior Subordinated Debentures: The 5.5% Junior Subordinated
Convertible Debentures due 2012 of the Company issued to the Trust pursuant to
the terms of the Indenture.
Liquidated Damages: See Section 3.
NASD: See Section 4(p).
Participant: See Section 6.
Person: An individual, a corporation, a partnership, an association, a
trust or any other entity or organization, including a government or political
subdivision or an agency or instrumentality thereof.
Prospectus: The prospectus included in any Registration Statement
(including, without limitation, a prospectus that includes any information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated under the Securities Act), as
amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Registrable Securities covered by such
Registration Statement, and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such Prospectus.
Registrable Securities: The Securities upon original issuance of the
Securities and at all times subsequent thereto until (i) a Registration
Statement covering such Securities has been declared effective by the SEC and
such Securities have been disposed of in accordance with such effective
Registration Statement, (ii) such Securities are sold in compliance with Rule
144, or (iii) Securities cease to be outstanding.
Registrants: The Company and the Trust, collectively.
Registration Statement: Any registration statement of the Registrants
that covers any of the Registrable Securities pursuant to the provisions of this
Agreement, including the Prospectus, amendments and supplements to such
registration statement, including post-effective amendments, all exhibits, and
all material incorporated by reference or deemed to be incorporated by reference
in such registration statement.
<PAGE>
-4-
Rule 144: Rule 144 promulgated under the Securities Act, as such rule
may be amended from time to time, or any similar rule (other than Rule 144A) or
regulation hereafter adopted by the SEC providing for offers and sales of
securities made in compliance therewith resulting in offers and sales by
subsequent holders that are not affiliates of an issuer of such securities being
free of the registration and prospectus delivery requirements of the Securities
Act.
Rule 144A: Rule 144A promulgated under the Securities Act, as such rule
may be amended from time to time, or any similar rule (other than Rule 144) or
regulation hereafter adopted by the SEC.
Rule 415: Rule 415 promulgated under the Securities Act, as such rule
may be amended from time to time, or any similar rule or regulation hereafter
adopted by the SEC.
SEC: The Securities and Exchange Commission.
Securities: The TECONS, the Junior Subordinated Debentures, the
Guarantee and the Common Stock until the TECONS have all been converted into
Common Stock, in which case Securities shall mean the Common Stock.
Securities Act: The Securities Act of 1933, as amended, and the rules
and regulations of the SEC promulgated thereunder.
Shelf Registration: See Section 2(b).
Subsequent Shelf Registration: See Section 2(b).
TECONS: See the introductory paragraph to this Agreement.
TIA: The Trust Indenture Act of 1939, as amended.
Trustees: The trustees under the Declaration.
Underwritten registration or underwritten offering: A registration in
which securities of the Registrants are sold to an underwriter for reoffering to
the public.
2. Shelf Registration
(a) The Registrants shall as promptly as reasonably practicable
prepare and file with the SEC a Registration
<PAGE>
-5-
Statement for an offering to be made on a continuous basis pursuant to
Rule 415 covering all of the Registrable Securities (the "Initial Shelf
Registration"). The Registrants shall use their reasonable best efforts
to file with the SEC the Initial Shelf Registration on or prior to the
Filing Date. The Initial Shelf Registration shall be on Form S-3 or
another appropriate form permitting registration of such Registrable
Securities for resale by such holders in the manner or manners
designated by them (including, without limitation, one or more
underwritten offerings). The Registrants shall not permit any
securities other than the Registrable Securities to be included in the
Initial Shelf Registration or any Subsequent Shelf Registration (as
defined below). The Registrants shall use their reasonable best efforts
to cause the Initial Shelf Registration to be declared effective under
the Securities Act on or prior to the 180th day after the filing
thereof with the SEC and to keep the Initial Shelf Registration
continuously effective under the Securities Act until the date which is
24 months from the Issue Date (subject to extension pursuant to the
last paragraph of Section 4 hereof) (the "Effectiveness Period"), or
such shorter period ending when (i) none of the Securities constitute
Registrable Securities or (ii) a Subsequent Shelf Registration covering
all of the Registrable Securities has been declared effective under the
Securities Act.
(b) Subsequent Shelf Registrations. If the Initial Shelf
Registration or any Subsequent Shelf Registration ceases to be
effective for any reason at any time during the Effectiveness Period,
the Registrants shall use their reasonable best efforts to obtain the
prompt withdrawal of any order suspending the effectiveness thereof,
and in any event shall within 45 days of such cessation of
effectiveness amend the Shelf Registration in a manner reasonably
expected to obtain the withdrawal of the order suspending the
effectiveness thereof, or file an additional "shelf" Registration
Statement pursuant to Rule 415 covering all of the Registrable
Securities (a "Subsequent Shelf Registration"). If a Subsequent Shelf
Registration is filed, the Registrants shall use their reasonable best
efforts to cause the Subsequent Shelf Registration to be declared
effective as soon as practicable after such filing and to keep such
Registration Statement continuously effective for a period equal to the
number of days in the Effectiveness Period less the aggregate number of
days during which the Initial Shelf Registration or any Subsequent
Shelf Registration was previously continuously effective. As
<PAGE>
-6-
used herein the term "Shelf Registration" means the Initial Shelf
Registration and any Subsequent Shelf Registration.
(c) Supplements and Amendments. The Registrants shall promptly
supplement and amend the Shelf Registration if required by the rules,
regulations or instructions applicable to the registration form used
for such Shelf Registration, if required by the Securities Act, or if
reasonably requested by the Holders of a majority of the shares of the
Registrable Securities covered by such Registration Statement or by any
underwriter of such Registrable Securities.
3. Liquidated Damages
(a) The Registrants and the Initial Purchasers agree that the
Holders of Registrable Securities will suffer damages if the
Registrants fail to fulfill their obligations under Section 2 hereof
and that it would not be feasible to ascertain the extent of such
damages with precision. Accordingly, the Registrants agree to pay, as
liquidated damages, additional cumulative cash distributions on the
Registrable Securities ("Liquidated Damages") (i) if the Initial Shelf
Registration Statement is not declared effective by the Commission on
or prior to the Effectiveness Date and (ii) if the effectiveness of the
Initial Shelf Registration Statement for resales thereunder is
suspended at any time during the Effectiveness Period in excess of 30
days in any consecutive three month period or 60 days in any
consecutive 12-month period (the "Black Out Period"), then, in each
case, Liquidated Damages shall accrue on the Registrable Securities
included or that should have been included in such Registration
Statement over and above the stated dividend at a rate of $0.25 per
TECON per annum for the first 90 days and increasing to $0.50 per TECON
per annum thereafter, commencing on (x) the 181st day after the Issue
Date in the case of clause (i) above and (y) the day such Initial Shelf
Registration Statement ceases to be effective in excess of the Black
Out Period in the case of clause (ii) above;
provided, however, that (1) upon the effectiveness of the Shelf Registration as
required hereunder (in the case of clause (a)(i) of this Section 3) or (2) upon
the effectiveness of the Shelf Registration which had ceased to remain effective
(in the case of (a)(ii) of this Section 3), Liquidated Damages on the
<PAGE>
-7-
Registrable Securities as a result of such clause, shall cease to accrue.
(b) The Registrants shall notify the Trustees within one business
day after each and every date on which an event occurs in respect of
which Liquidated Damages is required to be paid (an "Event Date"). The
Registrants shall pay the Liquidated Damages due on the Registrable
Securities by paying an increased cash dividend on the applicable
quarterly dividend payment date, or, if cash dividends are not being
paid on the TECONS in accordance with the Declaration, by accumulating
dividends at the higher rate. The Liquidated Damages due shall be
payable on each dividend payment date to the record Holder of
Registrable Securities entitled to receive the dividend payment to be
made on such date as set forth in the Declaration. The amount of
Liquidated Damages will be determined by multiplying the applicable
Liquidated Damages by the number of shares of the affected Registrable
Securities of such Holders, multiplied by a fraction, the numerator of
which is the number of days such Liquidated Damages were applicable
during such period (determined on the basis of a 360-day year comprised
of twelve 30-day months and, in the case of a partial month, the actual
number of days elapsed), and the denominator of which is 360. Each
obligation to pay Liquidated Damages shall be deemed to accrue
immediately following the occurrence of the applicable Event Date. The
parties hereto agree that the Liquidated Damages provided for in this
Section 3 constitutes a reasonable estimate of the damages that may be
incurred by Holders of Registrable Securities by reason of the failure
of a Shelf Registration to be declared effective or to remain
effective, as the case may be, in accordance with this Section 3.
4. Registration Procedures
In connection with the registration of any Registrable Securities
pursuant to Section 2 hereof, the Registrants shall effect such registrations to
permit the sale of such Registrable Securities in accordance with the intended
method or methods of disposition thereof, and pursuant thereto the Registrants
shall:
(a) Use their reasonable best efforts to prepare and file with
the SEC, as soon as practicable after the date hereof but in any event
prior to the Filing Date, a Registration Statement as prescribed by
Section 2, and to use
<PAGE>
-8-
their reasonable best efforts to cause such Registration Statement to
become effective and remain effective as provided herein, provided
that, before filing any Registration Statement or Prospectus or any
amendments or supplements thereto, the Registrants shall upon written
request furnish to and afford the Holders of the Registrable Securities
(which in the case of Registrable Securities in the form of global
certificates shall be The Depository Trust Company ("DTC")) covered by
such Registration Statement, a reasonable opportunity to review copies
of all such documents (including copies of any documents to be
incorporated by reference therein and all exhibits thereto) proposed to
be filed.
(b) Prepare and file with the SEC such amendments and
post-effective amendments to each Shelf Registration Statement, as the
case may be, as may be necessary to keep such Registration Statement
continuously effective for the Effectiveness Period; cause the related
Prospectus to be supplemented by any required Prospectus supplement,
and as so supplemented to be filed pursuant to Rule 424 (or any similar
provisions then in force) under the Securities Act; and comply with the
provisions of the Securities Act, the Exchange Act and the rules and
regulations of the SEC promulgated thereunder applicable to it with
respect to the disposition of all securities covered by such
Registration Statement as so amended or in such Prospectus as so
supplemented.
(c) Notify the selling Holders of Registrable Securities who have
provided the Registrants with their names and addresses promptly (but
in any event within two business days), and confirm such notice in
writing, (i) when a Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to a
Registration Statement or any post-effective amendment, when the same
has become effective under the Securities Act (including in such notice
a written statement that any Holder may, upon request, obtain, without
charge, one conformed copy of such Registration Statement or
post-effective amendment including financial statements and schedules,
documents incorporated or deemed to be incorporated by reference and
exhibits), (ii) of the issuance by the SEC of any stop order suspending
the effectiveness of a Registration Statement or of any order
preventing or suspending the use of any preliminary prospectus or the
initiation of any proceedings for that purpose, (iii) of the receipt by
the Registrants of any notificat-
<PAGE>
-9-
ion with respect to the suspension of the qualification or exemption
from qualification of a Registration Statement or any of the
Registrable Securities for offer or sale in any jurisdiction, or the
initiation or threatening of any proceeding for such purpose, (iv) of
the happening of any event or any information becoming known that makes
any statement made in such Registration Statement or related Prospectus
or any document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires the making of
any changes in such Registration Statement, Prospectus or documents so
that, in the case of the Registration Statement, it will not contain
any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements
therein not misleading, and that in the case of the Prospectus, it will
not contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which
they were made, not misleading, and (v) of the Registrants' reasonable
determination that a post-effective amendment to a Registration
Statement would be appropriate.
(d) Use their reasonable best efforts to prevent the issuance of
any order suspending the effectiveness of a Registration Statement or
of any order preventing or suspending the use of a Prospectus or
suspending the qualification (or exemption from qualification) of any
of the Registrable Securities for sale in any jurisdiction, and, if any
such order is issued, to use their reasonable best efforts to obtain
the withdrawal of any such order at the earliest possible moment.
(e) If requested by the Holders of a majority of the shares of
the Registrable Securities being sold in connection with an
underwritten offering, (i) promptly incorporate in a prospectus
supplement or post-effective amendment such information as such Holders
reasonably request to be included therein, or (ii) make all required
filings of such prospectus supplement or such post-effective amendment
as soon as practicable after the Registrants have received notification
of the matters to be incorporated in such prospectus supplement or
post-effective amendment.
(f) Furnish to each selling Holder of Registrable Securities, if
any, without charge, one conformed copy of
<PAGE>
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the Registration Statement or Statements and each post-effective
amendment thereto, including financial statements and schedules, and if
requested, all documents incorporated or deemed to be incorporated
therein by reference and all exhibits.
(g) Deliver to each selling Holder of Registrable Securities,
without charge, as many copies of the Prospectus or Prospectuses
(including each form of preliminary prospectus) and each amendment or
supplement thereto and any documents incorporated by reference therein
as such Persons may reasonably request; and, subject to the last
paragraph of this Section 4, the Registrants hereby consent to the use
of such Prospectus and each amendment or supplement thereto by each of
the selling holders of Registrable Securities and the underwriters or
agents, if any, and dealers (if any), in connection with the offering
and sale of the Registrable Securities covered by such Prospectus and
any amendment or supplement thereto.
(h) Prior to any public offering of Registrable Securities, to
use their reasonable best efforts to register or qualify, and to
cooperate with the selling Holders of Registrable Securities in
connection with the registration or qualification (or exemption from
such registration or qualification) of such Registrable Securities for
offer and sale under the securities or Blue Sky laws of such
jurisdictions within the United States as any selling Holder reasonably
requests in writing, provided that where Registrable Securities are
offered other than through an underwritten offering, the Registrants
agree to cause their counsel to perform Blue Sky investigations and
file registrations and qualifications required to be filed pursuant to
this Section 4(h); keep each such registration or qualification (or
exemption therefrom) effective during the period such Registration
Statement is required to be kept effective and do any and all other
reasonable acts or things necessary or advisable to enable the
disposition in such jurisdictions of the Registrable Securities covered
by the applicable Registration Statement, provided that neither the
Company nor the Trust shall be required to (A) qualify generally to do
business in any jurisdiction where it is then so qualified, (B) take
any action that would subject it to general service of process in any
such jurisdiction where it is not then so subject or (C) subject itself
to taxation in excess of a nominal dollar amount in any such
jurisdiction.
<PAGE>
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(i) Reasonably cooperate with the selling Holders of Registrable
Securities and the managing underwriters, if any, to facilitate the
timely preparation and delivery of certificates representing
Registrable Securities to be sold, which certificates shall not bear
any restrictive legends and shall be in a form eligible for deposit
with DTC; and enable such Registrable Securities to be registered in
such names as the managing underwriter or underwriters, if any, or
Holders may request.
(j) Use their reasonable best efforts to cause the Registrable
Securities covered by the Registration Statement to be registered with
or approved by such other United States governmental agencies or
authorities of the United States as may be necessary to enable the
seller or sellers thereof or the underwriters, if any, to consummate
the disposition of such Registrable Securities, except as may be
required solely as a consequence of the nature of such selling Holder's
business, in which case the Registrants will cooperate in all
reasonable respects with the filing of such Registration Statement and
the granting of such approvals.
(k) Upon the occurrence of any event contemplated by paragraph
4(c)(iv) or 4(c)(v) above, as promptly as practicable prepare and
(subject to Section 4(a) above) file with the SEC, solely at the
expense of the Registrants, a supplement or post-effective amendment to
the Registration Statement or a supplement to the related Prospectus or
any document incorporated or deemed to be incorporated therein by
reference, or file any other required document so that, as thereafter
delivered to the purchasers of the Registrable Securities being sold
thereunder, any such Prospectus will not contain an untrue statement of
a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
(l) Use their reasonable best efforts to cause the Registrable
Securities covered by a Registration Statement to be rated with the
appropriate rating agencies, if so requested by the Holders of a
majority of the shares of Registrable Securities covered by such
Registration Statement or the managing underwriters, if any.
(m) Prior to the effective date of the first Registration
Statement relating to the Registrable Securities,
<PAGE>
-12-
(i) provide the Trustees with printed certificates for the Registrable
Securities in a form eligible for deposit with DTC and (ii) provide a
CUSIP number for the Registrable Securities.
(n) Provide an indenture trustee for the Junior Subordinated
Debentures and cause the Indenture and the Guarantee Agreement to be
qualified under the TIA not later than the effective date of the first
Registration Statement relating to the Registrable Securities; and in
connection therewith, cooperate with the trustee under the Indenture
and the holders of the Registrable Securities, to effect such changes
to the Indenture and the Guarantee Agreement as may be required for the
Indenture and the Guarantee Agreement to be so qualified in accordance
with the terms of the TIA; and execute, and use its reasonable best
efforts to cause such trustee to execute, all documents as may be
required to effect such changes, and all other forms and documents
required to be filed with the SEC to enable the Indenture and the
Guarantee Agreement to be so qualified in a timely manner.
(o) Comply in all material respects with all applicable rules and
regulations of the SEC and make generally available to its
securityholders earning statements satisfying the provisions of Section
11(a) of the Securities Act and Rule 158 thereunder (or any similar
rule promulgated under the Securities Act) no later than 90 days after
the end of any 12-month period (i) commencing at the end of any fiscal
quarter in which Registrable Securities are sold to underwriters in a
firm commitment or best efforts underwritten offering and (ii) if not
sold to underwriters in such an offering, commencing on the first day
of the first fiscal quarter of the Company after the effective date of
a Shelf Registration Statement, which statements shall cover said
12-month periods.
(p) Reasonably cooperate with each seller of Registrable
Securities covered by any Registration Statement participating in the
disposition of such Registrable Securities and their respective counsel
in connection with any filings required to be made with the National
Association of Securities Dealers, Inc. (the "NASD").
(q) Use their reasonable best efforts to take all other steps
necessary to effect the registration of the Registrable Securities
covered by a Registration Statement contemplated hereby.
<PAGE>
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The Registrants may require each seller of Registrable Securities to
furnish to the Registrants such information regarding such seller and the
distribution of such Registrable Securities as the Registrants may, from time to
time, reasonably request. The Registrants may exclude from such registration the
Registrable Securities of any seller who unreasonably fails to furnish such
information within a reasonable time after receiving such request. Each seller
as to which any Shelf Registration is being effected is deemed to agree to
furnish promptly to the Registrants all information required to be disclosed in
order to make the information previously furnished to the Registrants by such
seller not materially misleading.
Each Holder of Registrable Securities agrees by acquisition of such
Registrable Securities that, upon receipt of any notice from the Registrants of
the happening of any event of the kind described in Section 4(c)(ii), 4(c)(iii),
4(c)(iv), or 4(c)(v), such Holder will forthwith discontinue disposition of such
Registrable Securities covered by such Registration Statement or Prospectus
until such holder's receipt of the copies of the supplemented or amended
Prospectus contemplated by Section 4(k), or until it is advised in writing (the
"Advice") by the Registrants that the use of the applicable Prospectus may be
resumed, and has received copies of any amendments or supplements thereto. In
the event the Registrants shall give any such notice, the Effectiveness Period
shall be extended by the number of days during such period from and including
the date of the giving of such notice to and including the date when each seller
of Registrable Securities covered by such Registration Statement shall have
received (x) the copies of the supplemented or amended Prospectus contemplated
by Section 4(k) or (y) the Advice.
5. Registration Expenses
All fees and expenses incident to the performance of or compliance with
this Agreement by the Registrants shall be borne by the Registrants whether or
not a Shelf Registration is filed or becomes effective, including, without
limitation, (i) all registration and filing fees (including, without limitation,
(A) fees with respect to filings required to be made with the NASD in connection
with an underwritten offering and (B) fees and expenses of compliance with state
securities or Blue Sky laws (including, without limitation, reasonable fees and
disbursements of counsel in connection with Blue Sky qualifications of the
Registrable Securities and determination of the eligibility of the Registrable
Securities for investment under the laws of such jurisdictions in the United
States as
<PAGE>
-14-
provided in Section 4(h)), (ii) printing expenses (including, without
limitation, expenses of printing certificates for Registrable Securities in a
form eligible for deposit with DTC and of printing prospectuses if the printing
of prospectuses is requested by the managing underwriters, if any, or, in
respect of Registrable Securities, by the Holders of a majority of shares of the
Registrable Securities included in any Registration Statement), (iii) messenger,
telephone and delivery expenses, (iv) fees and disbursements of counsel for the
Registrants, (v) fees and disbursements of all independent certified public
accountants for the Registrants, (vi) rating agency fees, (vii) Securities Act
liability insurance, if the Registrants desire such insurance, (viii) fees and
expenses of all other Persons retained by the Registrants, (ix) internal
expenses of the Registrants (including, without limitation, all salaries and
expenses of officers and employees of the Registrants performing legal or
accounting duties), (x) the expense of any annual audit, (xi) the fees and
expenses incurred in connection with the listing of the securities to be
registered on any securities exchange, if applicable, (xii) the expenses
relating to printing, word processing and distributing all Registration
Statements, underwriting agreements, securities sales agreements, indentures and
any other documents necessary in order to comply with this Agreement and (xiii)
fees and expenses of the Trustees and the trustee under the Indenture (including
reasonable fees and expenses of counsel to such trustees).
6. Indemnification
The Registrants agree, jointly and severally, to indemnify and hold
harmless each Holder of Registrable Securities, the officers and directors of
each such person, and each person, if any, who controls any such person within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act (each, a "Participant"), from and against any and all losses, claims,
damages, liabilities and judgments caused by any untrue statement or alleged
untrue statement of a material fact contained in any Registration Statement or
Prospectus (as amended or supplemented if the Registrants shall have furnished
any amendments or supplements thereto) or any preliminary prospectus, or caused
by any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages, liabilities or judgments are
caused by any such untrue statement or omission or alleged untrue statement or
omission based upon information relating to any Participant furnished in writing
to the Registrants by or on behalf of such Participant expressly for use
<PAGE>
-15-
therein; provided, however, that the foregoing indemnity agreement with respect
to any preliminary prospectus shall not inure to the benefit of any Participant
(or to the benefit of any person controlling such Participant) from whom the
person asserting any such losses, claims, damages, liabilities or judgments
purchased Registrable Securities if a copy of the Prospectus (as then amended or
supplemented if the Registrants shall have furnished any amendments or
supplements thereto) was not sent or given by or on behalf of such Participant
to such person, if required by law so to have been delivered, at or prior to the
written confirmation of the sale of such Registrable Securities to such person,
and if the Prospectus (as so amended or supplemented) would have cured the
defect giving rise to such losses, claims, damages, liabilities or judgments.
Each Participant will be required to agree, severally and not jointly,
to indemnify and hold harmless each of the Company and the Trust, its respective
directors, officers and each person, if any, who controls the Company or the
Trust within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act to the same extent as the foregoing indemnity from the
Registrants to each Participant, but only with reference to information relating
to such Participant furnished in writing to the Registrants by or on behalf of
such Participant expressly for use in any Registration Statement or Prospectus,
any amendment or supplement thereto, or any preliminary prospectus. The
liability of any Participant under this paragraph shall in no event exceed the
proceeds received by such Participant from sales of Registrable Securities
giving rise to such obligations.
In case any action shall be brought against any person in respect of
which indemnity may be sought pursuant to either of the two preceding
paragraphs, such person (the "Indemnified Person") shall promptly notify the
person against whom such indemnity may be sought (the "Indemnifying Person") in
writing and the Indemnifying Person shall assume the defense thereof, including
the employment of counsel reasonably satisfactory to the Indemnified Person and
payment of all fees and expenses. Any Indemnified Person shall have the right to
employ separate counsel in any such action and participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Person unless (i) the employment of such counsel has been
specifically authorized in writing by the Indemnifying Person, (ii) the
Indemnifying Person has failed to assume the defense and employ counsel or (iii)
the named parties to any such action (including any impleaded parties) include
both the Indemnifying
<PAGE>
-16-
Person and the Indemnified Person and such Indemnified Party shall have been
advised by such counsel that there may be one or more legal defenses available
to it which are different from or additional to those available to the
Indemnifying Person (in which case the Indemnifying Person shall not have the
right to assume the defense of such action on behalf of such Indemnified Person,
it being understood, however, that the Indemnifying Person shall not, in
connection with any one such action or separate but substantially similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable fees and expenses of
more than one separate firm of attorneys (in addition to any local counsel) for
all Indemnified Persons, and that all such fees and expenses shall be reimbursed
as they are incurred). Any such separate firm for the Participants and such
control persons of Participants shall be designated in writing by Participants
who sold a majority in interest of Registrable Securities sold by all such
Participants and any such separate firm for the Registrants, their respective
directors, officers and such control persons of the Registrants shall be
designated in writing by the Registrants. The Indemnifying Person shall not be
liable for any settlement of any such action effected without its written
consent, but if settled with the written consent, the Indemnifying Person agrees
to indemnify and hold harmless any Indemnified Person from and against any loss
or liability by reason of such settlement. Notwithstanding the foregoing
sentence, if at any time an Indemnified Person shall have requested an
Indemnifying Person to reimburse the Indemnified Person for fees and expenses of
counsel as contemplated by the third sentence of this paragraph, the
Indemnifying Person agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 10 business days after receipt by such Indemnifying
Person of the aforesaid request and (ii) such Indemnifying Person shall not have
reimbursed the Indemnified Person in accordance with such request prior to the
date of such settlement. No Indemnifying Person shall, without the prior written
consent of the Indemnified Person, effect any settlement of any pending or
threatened proceeding in respect of which any Indemnified Person is or could
have been a party and indemnity could have been sought hereunder by such
Indemnified Person, unless such settlement includes an unconditional release of
such Indemnified Person from all liability on claims that are the subject matter
of such proceeding.
If the Indemnification provided for in the first and second paragraphs
of this Section 6 is unavailable to an Indemnified Person in respect of any
losses, claims, damages, lia-
<PAGE>
-17-
bilities or judgments referred to therein, then each Indemnifying Person under
such paragraph, in lieu of indemnifying such Indemnified Person thereunder,
shall contribute to the amount paid or payable by such Indemnified Person as a
result of such losses, claims, damages, liabilities or judgments in such
proportion as is appropriate to reflect the relative fault of the Registrants on
the one hand and the Participants on the other hand in connection with the
statements or omissions that resulted in such losses, claims, damages,
liabilities, or judgments as well as any other relevant equitable
considerations. The relative fault of the Registrants on the one hand and the
Participants on the other hand shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Registrants or by the Participants and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The parties shall agree that it would not be just and equitable if
contribution pursuant to the prior paragraph were determined by pro rata
allocation (even if the Participants were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in the immediately preceding paragraph. The
amount paid or payable by an Indemnified Person as a result of the losses,
claims, damages, liabilities or judgments referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such Indemnified
Person in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 6, no Participant shall be
required to contribute any amount in excess of the amount by which proceeds
received by such Participant from sales of Registrable Securities exceeds the
amount of any damages that such Participant has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
The indemnity and contribution agreements contained in this Section 6
will be in addition to any liability which the Indemnifying Persons may
otherwise have to the Indemnified Persons referred to above.
7. Rule 144 and Rule 144A
The Registrants covenant that they will file the reports required to be
filed by them under the Securities Act and the Exchange Act and the rules and
regulations adopted by the SEC thereunder in a timely manner and, if at any time
the Registrants are not required to file such reports, they will, upon the
request of any Holder of Registrable Securities, make publicly available other
information so long as necessary to permit sales pursuant to Rule 144 and Rule
144A under the Securities Act. The Registrants further covenant that they will
take such further action as any Holder of Registrable Securities may reasonably
request, all to the extent required from time to time to enable such holder to
sell Registrable Securities without registration under the Securities Act within
the limitation of the exemptions provided by (a) Rule 144 and Rule 144A under
the Securities Act, as such rules may be amended from time to time, or (b) any
similar rule or regulation hereafter adopted by the SEC.
8. Underwritten Registrations
If any of the Registrable Securities covered by any Shelf Registration
are to be sold in an underwritten offering, the investment banker or investment
bankers and manager or managers that will manage the offering will be selected
by the Holders of a majority of the shares of such Registrable Securities
included in such offering and be reasonably acceptable to the Registrants.
No Holder of Registrable Securities may participate in any underwritten
registration hereunder unless such Holder (a) agrees to sell such Holder's
Registrable Securities on the basis provided in any underwriting arrangements
approved by the Persons entitled hereunder to approve such arrangements and (b)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents required under the terms of such
underwriting arrangements.
9. Miscellaneous
(a) Remedies. In the event of a breach by the Registrants of any
of their respective obligations under this Agreement, each Holder of
Registrable Securities, in addition to being entitled to exercise all
rights provided herein, in the Declaration, the Indenture, the
Guarantee Agreement or, in the case of the Initial Purchasers, in the
Purchase Agreement or granted by law, including recov-
<PAGE>
-19-
ery of damages, will be entitled to specific performance of its rights
under this Agreement. The Registrants agree that monetary damages would
not be adequate compensation for any loss incurred by reason of a
breach by it of any of the provisions of this Agreement and hereby
further agree that, in the event of any action for specific performance
in respect of such breach, the Registrants shall waive the defense that
a remedy at law would be adequate.
(b) No Inconsistent Agreements. The Registrants have not, as of
the date hereof, entered and shall not, after the date of this
Agreement, enter into any agreement with respect to any of its
respective securities that is inconsistent with the rights granted to
the Holders of Registrable Securities in this Agreement or otherwise
conflicts with the provisions hereof. The Registrants have not entered
and will not enter into any agreement with respect to any of its
respective securities which will grant to any Person piggy-back rights
with respect to a Registration Statement.
(c) Adjustments Affecting Registrable Securities. The Registrants
shall not, directly or indirectly, take any action with respect to the
Registrable Securities as a class that would adversely affect the
ability of the Holders of Registrable Securities to include such
Registrable Securities in a registration undertaken pursuant to this
Agreement.
(d) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified
or supplemented, and waivers or consents to departures from the
provisions hereof may not be given, unless the Registrants have
obtained the written consent of Holders of at least a majority of the
Registrable Securities. Notwithstanding the foregoing, a waiver or
consent to depart from the provisions hereof with respect to a matter
that relates exclusively to the rights of Holders of Registrable
Securities whose securities are being sold pursuant to a Registration
Statement and that does not directly or indirectly affect, impair,
limit or compromise the rights of other Holders of Registrable
Securities may be given by Holders of at least a majority of the
Registrable Securities being sold by such Holders pursuant to such
Registration Statement, provided that the provisions of this sentence
may not be amended, modified or supplemented except in accordance with
the provisions of the immediately preceding sentence.
<PAGE>
-20-
(e) Notices. All notices and other communications (including
without limitation any notices or other communications to the Trustees)
provided for or permitted hereunder shall be made in writing by
hand-delivery, registered first-class mail, next-day air courier or
telecopier:
(i) if to a Holder of Registrable Securities, at the most
current address given by the Trustees to the Registrants; and
(ii) if to the Registrants, at 1001 North 19th Street, Suite
2000, Arlington, Virginia 22209, Attention: William R. Luraschi;
with a copy to Davis Polk & Wardwell, 450 Lexington Avenue, New
York, New York 10017, Attention: Richard D. Truesdell, Jr.
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; five business days after
being deposited in the mail, postage prepaid, if mailed; one business day after
being timely delivered to a next-day air courier; and when receipt is
acknowledged by the addressee, if telecopied.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the trustee under the
Indenture at the address specified in the Indenture.
(f) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of
the parties, including without limitation and without the need for an
express assignment, subsequent Holders of Registrable Securities;
provided, that, with respect to the indemnity and contribution
agreements in Section 6, each Holder of Registrable Securities
subsequent to the Initial Purchasers shall be bound by the terms
thereof if such Holder elects to include Registrable Securities in a
Shelf Registration; provided, however, that this Agreement shall not
inure to the benefit of or be binding upon a successor or assign of a
Holder unless and to the extent such successor or assign holds
Registrable Securities.
(g) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each
of which when so executed
<PAGE>
-21-
shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning
hereof.
(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS
APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK,
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES
HERETO AGREES TO SUBMIT TO THE JURISDICTION OF THE COURTS OF THE STATE
OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT.
(j) Severability. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction to be
invalid, illegal, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions set forth herein shall remain in
full force and effect and shall in no way be affected, impaired or
invalidated, and the parties hereto shall use their best efforts to
find and employ an alternative means to achieve the same or
substantially the same result as that contemplated by such term,
provision, covenant or restriction. It is hereby stipulated and
declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions
without including any of such that may be hereafter declared invalid,
illegal, void or unenforceable.
(k) Entire Agreement. This Agreement, together with the Purchase
Agreement, is intended by the parties as a final expression of their
agreement, and is intended to be a complete and exclusive statement of
the agreement and understanding of the parties hereto in respect of the
subject matter contained herein and therein.
(l) Securities Held by the Registrants or Their Affiliates.
Whenever the consent or approval of holders of a specified percentage
of Registrable Securities is required hereunder, Registrable Securities
held by the Registrants or any of their affiliates (as such term is
defined in Rule 405 under the Securities Act) shall not be counted in
determining whether such consent or approval was given by the Holders
of such required percentage.
<PAGE>
S-1
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
AES TRUST II,
a Delaware statutory business trust
By: THE AES CORPORATION,
as Sponsor
By:
------------------------------------
Name:
Title:
THE AES CORPORATION
By:
------------------------------------
Name:
Title:
J.P. MORGAN SECURITIES INC.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
UNTERBERG HARRIS, L.P.
By: J.P. Morgan Securities Inc.
By: James J. Fuscheld
-----------------------------------
Name:
Title: Managing Director
================================================================================
AMENDED AND RESTATED DECLARATION OF TRUST
OF
AES TRUST II
---------------------------------------
DATED AS OF OCTOBER 29, 1997
---------------------------------------
================================================================================
<PAGE>
TABLE OF CONTENTS
----------------------
<TABLE>
<CAPTION>
PAGE
----
ARTICLE 1
---------
DEFINITIONS
-----------
<S> <C>
SECTION 1.01. Definitions....................................................2
ARTICLE 2
---------
TRUST INDENTURE ACT
-------------------
SECTION 2.01. Trust Indenture Act; Application...............................9
SECTION 2.02. Lists of Holders of Preferred Securities......................10
SECTION 2.03. Reports by the Property Trustee...............................10
SECTION 2.04. Periodic Reports to Property Trustee..........................10
SECTION 2.05. Evidence of Compliance with Conditions Precedent..............10
SECTION 2.06. Events of Default; Waiver.....................................10
SECTION 2.07. Disclosure of Information.....................................12
ARTICLE 3
---------
ORGANIZATION
------------
SECTION 3.01. Name..........................................................13
SECTION 3.02. Office........................................................13
SECTION 3.03. Issuance of the Trust Securities..............................13
SECTION 3.04. Purchase of Debentures........................................14
SECTION 3.05. Purpose.......................................................14
SECTION 3.06. Authority.....................................................15
SECTION 3.07. Title to Property of the Trust................................15
SECTION 3.08. Powers and Duties of the Regular Trustees.....................15
SECTION 3.09. Prohibition of Actions by Trust and Trustees..................18
SECTION 3.10. Powers and Duties of the Property Trustee.....................19
SECTION 3.11. Delaware Trustee..............................................22
SECTION 3.12. Certain Rights and Duties of the Property Trustee.............22
SECTION 3.13. Filing of Amendments to Certificate of Trust..................25
SECTION 3.14. Execution of Documents by Regular Trustees....................25
SECTION 3.15. Trustees Not Responsible for Recitals or Issuance of
Securities..........................................................25
SECTION 3.16. Duration of Trust.............................................26
ARTICLE 4
---------
SPONSOR
-------
<PAGE>
PAGE
----
SECTION 4.01. Purchase of Common Securities by Sponsor......................26
SECTION 4.02. Expenses......................................................26
ARTICLE 5
---------
TRUSTEES
--------
SECTION 5.01. Number of Trustees; Qualifications............................27
SECTION 5.02. Appointment, Removal and Resignation of Trustees..............29
SECTION 5.03. Vacancies among Trustees......................................31
SECTION 5.04. Effect of Vacancies...........................................31
SECTION 5.05. Meetings......................................................31
SECTION 5.06. Delegation of Power...........................................32
ARTICLE 6
---------
DISTRIBUTIONS
-------------
SECTION 6.01. Distributions.................................................32
ARTICLE 7
---------
ISSUANCE OF SECURITIES
----------------------
SECTION 7.01. General Provisions Regarding Securities.......................32
SECTION 7.02. Conversion Agent..............................................34
ARTICLE 8
---------
TERMINATION OF TRUST
--------------------
SECTION 8.01. Termination of Trust..........................................35
ARTICLE 9
---------
TRANSFER OF INTERESTS
---------------------
SECTION 9.01. Transfer of Securities........................................35
SECTION 9.02. Transfer of Certificates......................................38
SECTION 9.03. Deemed Security Holders.......................................39
SECTION 9.04. Book Entry Interests..........................................39
SECTION 9.05. Notices to Holders of Certificates............................42
SECTION 9.06. Appointment of Successor Clearing Agency......................42
SECTION 9.07. Definitive Preferred Securities Certificates..................42
SECTION 9.08. Mutilated, Destroyed, Lost or Stolen Certificates.............43
ii
<PAGE>
PAGE
----
ARTICLE 10
----------
LIMITATION OF LIABILITY; INDEMNIFICATION
----------------------------------------
SECTION 10.01. Exculpation..................................................43
SECTION 10.02. Indemnification..............................................44
SECTION 10.03. Outside Business.............................................45
ARTICLE 11
----------
ACCOUNTING
----------
SECTION 11.01. Fiscal Year..................................................45
SECTION 11.02. Certain Accounting Matters...................................45
SECTION 11.03. Banking......................................................46
SECTION 11.04. Withholding..................................................46
ARTICLE 12
----------
AMENDMENTS AND MEETINGS
-----------------------
SECTION 12.01. Amendments...................................................47
SECTION 12.02. Meetings of the Holders of Securities; Action by Written
Consent.............................................................48
ARTICLE 13
----------
REPRESENTATIONS OF PROPERTY TRUSTEE AND DELAWARE TRUSTEE
--------------------------------------------------------
SECTION 13.01. Representations and Warranties of Property Trustee
...................................................................49
ARTICLE 14
----------
MISCELLANEOUS
-------------
SECTION 14.01. Notices......................................................51
SECTION 14.02. Undertaking for Costs........................................52
SECTION 14.03. Governing Law................................................52
SECTION 14.04. Headings.....................................................52
SECTION 14.05. Partial Enforceability.......................................53
SECTION 14.06. Counterparts.................................................53
SECTION 14.07. Intention of the Parties.....................................53
SECTION 14.08. Successors and Assigns.......................................53
</TABLE>
AMENDED AND RESTATED
DECLARATION OF TRUST
<PAGE>
OF
AES TRUST II
OCTOBER 29, 1997
AMENDED AND RESTATED DECLARATION OF TRUST
("Declaration") dated and effective as of October 29, 1997 by the undersigned
trustees (together with all other Persons from time to time duly appointed and
serving as trustees in accordance with the provisions of this Declaration, the
"Trustees"), The AES Corporation, a Delaware corporation, as trust sponsor
("AES" or the "Sponsor"), and by the holders, from time to time, of undivided
beneficial interests in the assets of the Trust to be issued pursuant to this
Declaration.
WHEREAS, the Sponsor and the certain of the Trustees entered into a
Declaration of Trust dated as of November 1, 1996 (the "Original Declaration")
in order to establish a statutory business trust (the "Trust") under the
Business Trust Act (as hereinafter defined);
WHEREAS, the Certificate of Trust (the "Certificate of Trust") of the
Trust was filed with the office of the Secretary of State of the State of
Delaware on November 5, 1996 and was restated on March 27, 1997;
WHEREAS, the Trustees and the Sponsor desire to continue the Trust
pursuant to the Business Trust Act for the purpose of, as described more fully
in Sections 3.03 and 3.04 hereof, (i) issuing and selling Preferred Securities
(as defined herein) representing preferred undivided beneficial interests in the
assets of the Trust for cash and investing the proceeds thereof in Debentures
(as hereinafter defined) of AES issued under the Indenture (as hereinafter
defined) to be held as assets of the Trust and (ii) issuing and selling Common
Securities (as defined herein) representing common undivided beneficial
interests in the assets of the Trust to AES in exchange for cash and investing
the proceeds thereof in additional Debentures issued under the Indenture to be
held as assets of the Trust;
NOW, THEREFORE, it being the intention of the parties hereto that the
Trust constitute a business trust under the Business Trust Act, that the
Original Declaration be amended and restated in its entirety as provided herein
and that this Declaration constitute the governing instrument of such business
trust, the Trustees declare that all assets referred to in clauses (i) and (ii)
of the previous Whereas clause purchased by the Trust will be held in trust for
the benefit of the Holders (as defined herein) from time to time, of the
Certificates (as defined
2
<PAGE>
herein) representing undivided beneficial interests in the assets of the Trust
issued hereunder, subject to the provisions of this Declaration.
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions.
(a) Capitalized terms used in this Declaration but not defined in the
preamble above have the respective meanings assigned to them in this Section
1.01;
(b) a term defined anywhere in this Declaration has the same meaning
throughout;
(c) all references to "the Declaration" or "this Declaration" are to
this Amended and Restated Declaration of Trust (including Exhibits A, B and C
hereto (the "Exhibits")) as modified, supplemented or amended from time to time;
(d) all references in this Declaration to Articles and Sections and
Exhibits are to Articles and Sections of and Exhibits to this Declaration unless
otherwise specified;
(e) a term defined in the Trust Indenture Act has the same meaning when
used in this Declaration unless otherwise defined in this Declaration or unless
the context otherwise requires; and
(f) a reference to the singular includes the plural and vice versa.
"Affiliate" has the same meaning as given to that term in Rule 405 of
the Securities Act or any successor rule thereunder.
"Book Entry Interest" means a beneficial interest in a Global
Certificate registered in the name of a Clearing Agency or a nominee thereof,
ownership and transfers of which shall be maintained and made through book
entries by such Clearing Agency as described in Section 9.04.
"Business Day" means any day other than a Saturday, Sunday or any other
day on which banking institutions in the City of New York, in the State of New
York are authorized or required by applicable law to close.
3
<PAGE>
"Business Trust Act" means Chapter 38 of Title 12 of the Delaware Code,
12 Del. Code ss. 3801 et seq., as it may be amended from time to time.
"Certificate" means a Common Security Certificate or a Preferred
Security Certificate.
"Certificate of Trust" has the meaning set forth in the second Whereas
clause above.
"Clearing Agency" means an organization registered as a "Clearing
Agency" pursuant to Section 17A of the Exchange Act that is acting as depository
for the Preferred Securities and in whose name or in the name of a nominee of
that organization, shall be registered a Global Certificate and which shall
undertake to effect book entry transfers and pledges of the Preferred
Securities.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time the Clearing
Agency effects book entry transfers and pledges of securities deposited with the
Clearing Agency.
"Closing Date" means the Closing Date as specified in the Purchase
Agreement, which date is also the date of execution and delivery of this
Declaration.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, or any successor legislation. A reference to a specific section ((Sec.))
of the Code refers not only to such specific section but also to any
corresponding provision of any federal tax statute enacted after the date of
this Declaration, as such specific section or corresponding provision is in
effect on the date of application of the provisions of this Declaration
containing such reference.
"Commission" means the Securities and Exchange Commission.
"Common Security" has the meaning specified in Section 7.01(b).
"Common Security Certificate" means a definitive certificate in fully
registered form representing a Common Security substantially in the form of
Annex I to Exhibit C.
"Common Stock" means the common stock of AES, par value $.01 per share.
"Conversion Agent" has the meaning specified in Section 7.02.
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"Covered Person" means (i) any officer, director, shareholder, partner,
member, representative, employee or agent of the Trust or its Affiliates, (ii)
any officer, director, shareholder, employees, representatives or agents of AES
or its Affiliates and (iii) the Holders from time to time of the Securities.
"Debenture Trustee" means The First National Bank of Chicago, as
trustee under the Indenture until a successor is appointed thereunder and
thereafter means such successor trustee.
"Debentures" means the series of Junior Subordinated Convertible
Debentures issued by AES under the Indenture to the Property Trustee and
entitled the "5.50% Junior Subordinated Debentures due 2012".
"Definitive Preferred Security Certificates" has the meaning set forth
in Section 9.04.
"Delaware Trustee" has the meaning set forth in Section 5.01(a)(3).
"Depositary Agreement" means the agreement among the Trust, the
Property Trustee and DTC dated as of the Closing Date, as the same may be
amended or supplemented from time to time.
"Distribution" means a distribution payable to Holders of Securities in
accordance with Section 6.01.
"DTC" means The Depository Trust Company, the initial Clearing Agency.
"Event of Default" in respect of the Securities means an Indenture
Event of Default has occurred and is continuing in respect of the Debentures.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time or any successor legislation.
"Fiscal Year" has the meaning specified in Section 11.01.
"Global Certificate" has the meaning set forth in Section 9.04.
"Holder" means a Person in whose name a Certificate representing a
Security is registered, such Person being a beneficial owner within the meaning
of the Business Trust Act.
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"Indemnified Person" means any Trustee, any Affiliate of any Trustee,
any Conversion Agent, any Paying Agent, any officers, directors, shareholders,
members, partners, employees, representatives or agents of any Trustee,
Conversion Agent or Paying Agent, or any employee or agent of the Trust or its
Affiliates.
"Indenture" means the Junior Subordinated Indenture dated as of March
1, 1997 between AES and the Debenture Trustee as supplemented by the First
Supplemental Indenture thereto dated as of March 31, 1997 and by the Second
Supplemental Indenture thereto dated as of October 29, 1997, pursuant to which
the Debentures are to be issued.
"Indenture Event of Default" means an event or condition defined as an
"Event of Default" with respect to the Debentures under Section 6.01(a) of the
Indenture has occurred and is continuing.
"Initial Purchasers" means the initial purchasers as defined in the
Purchase Agreement.
"Investment Company" means an investment company as defined in the
Investment Company Act.
"Investment Company Act" means the Investment Company Act of 1940, as
amended from time to time or any successor legislation.
"Institutional Accredited Investor" means an institutional investor
that is an "accredited investor" within the meaning of Rule 501(a)(1), (2), (3)
or (7) under the Securities Act.
"Legal Action" has the meaning specified in Section 3.08(g).
"Liquidation Distribution" has the meaning set forth in Exhibits B and
C hereto establishing the terms of the Securities.
"Majority in liquidation amount of the Securities" means, except as
otherwise required by the Trust Indenture Act and except as provided in the
penultimate paragraph of paragraph 6 of Exhibit B hereto, Holder(s) of
outstanding Securities voting together as a single class or, as the context may
require, Holder(s) of outstanding Preferred Securities or Common Securities
voting separately as a class, who are the record owners of a relevant class of
Securities whose liquidation amount (including the stated amount that would be
paid on redemption, liquidation or otherwise, plus accrued and unpaid
Distributions to the date upon which the voting percentages are determined)
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represents more than 50% of the liquidation amount of all outstanding Securities
of such class.
"Ministerial Action" has the meaning set forth in the terms of the
Securities as set forth in Exhibits B and C hereto.
"144A Global Security" has the meaning specified in Section 9.04(b).
"Option Closing Date" means the Option Closing Date as specified in the
Purchase Agreement.
"Original Declaration" has the meaning set forth in the first WHEREAS
clause above.
"Paying Agent" has the meaning specified in Section 3.10(i).
"Permanent Regulation S Global Security" has the meaning set forth in
Section 9.04(b).
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever nature.
"PORTAL Market" means the Private Offerings, Resales and Trading
through Automated Linkages Market operated by the National Association of
Securities Dealers, Inc. (or any successor thereto).
"Preferred Guarantee" means the Guarantee Agreement dated as of October
29, 1997 of AES in respect of the Preferred Securities.
"Preferred Security" has the meaning specified in Section 7.01(b).
"Preferred Security Beneficial Owner" means, with respect to a Book
Entry Interest, a Person who is the beneficial owner of such Book Entry
Interest, as reflected on the books of the Clearing Agency, or on the books of a
Person maintaining an account with such Clearing Agency (directly as a Clearing
Agency Participant or as an indirect participant, in each case in accordance
with the rules of such Clearing Agency).
"Preferred Security Certificate" means a definitive certificate in
fully registered form representing a Preferred Security substantially in the
form of Annex I to Exhibit B.
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"Property Trustee" means the Trustee meeting the eligibility
requirements set forth in Section 5.01(c) and having the duties set forth for
the Property Trustee herein.
"Purchase Agreement" means the Purchase Agreement dated as of October
23, 1997 among the Trust, the Sponsor, J.P. Morgan Securities Inc., Donaldson,
Lufkin & Jenrette Securities Corporation and Unterberg Harris.
"Property Account" has the meaning specified in Section 3.10(c)(i).
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"Quorum" means a majority of the Regular Trustees or, if there are only
two Regular Trustees, both such Regular Trustees.
"Registration Rights Agreement" means the Registration Rights Agreement
dated as of October 29, 1997 among The AES Corporation, AES Trust II, J.P.
Morgan Securities, Inc., Donaldson, Lufkin & Jennrette Securities Corporation
and Unterberg Harris, L.P.
"Regulation S" means Regulation S under the Securities Act.
"Regulation S Global Security" has the meaning specified in Section
9.04(b).
"Regulation S Securities Exchange Date" has the meaning set forth in
Section 9.04(b).
"Restricted Security" has the meaning specified in Section 9.01(d).
"Rule 144" means Rule 144 as promulgated under the Securities Act.
"Rule 144A" means Rule 144A as promulgated under the Securities Act.
"Rule 144(k)" means Rule 144(k) as promulgated under the Securities
Act.
"Regular Trustee" means any Trustee other than the Property Trustee and
the Delaware Trustee.
"Related Party" means any direct or indirect wholly owned subsidiary of
AES or any other Person which owns, directly or indirectly, 100% of the
outstanding voting securities of AES.
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"Resignation Request" has the meaning specified in Section 5.02(d).
"Responsible Officer" means, with respect to the Property Trustee, the
chairman of the board of directors, the president, any vice-president, any
assistant vice-president, the secretary, any assistant secretary, the treasurer,
any assistant treasurer, any trust officer or assistant trust officer or any
other officer of the Property Trustee customarily performing functions similar
to those performed by any of the above designated officers and also means, with
respect to a particular corporate trust matter, any other officer to whom such
matter is referred because of that officer's knowledge of and familiarity with
the particular subject.
"Rule 3a-7" means Rule 3a-7 under the Investment Company Act or any
successor rule thereunder.
"Securities" means the Common Securities and the Preferred Securities.
"Securities Act" means the Securities Act of 1933, as amended from time
to time or any successor legislation.
"Special Event" has the meaning set forth in Annex I hereto.
"Special Event" has the meaning set forth in the terms of the
Securities as set forth in Exhibits B and C hereto.
"Sponsor" or "AES" means The AES Corporation, a Delaware corporation,
or any successor entity in a merger, in its capacity as sponsor of the Trust.
"Successor Delaware Trustee" has the meaning specified in Section
5.02(b)(ii).
"Successor Property Trustee" means a successor Trustee possessing the
qualifications to act as Property Trustee under Section 5.01(c).
"Temporary Regulation S Global Security" has the meaning set forth in
Section 9.04(b).
"10% in liquidation amount of the Securities" means, except as
otherwise required by the Trust Indenture Act and except as provided in the
penultimate paragraph of paragraph 6 of Exhibit B hereto, Holder(s) of
outstanding Securities voting together as a single class or, as the context may
require, Holder(s) of outstanding Preferred Securities or Common Securities,
voting separately as a class, who are the record owners of a relevant class of
Securities whose
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liquidation amount (including the stated amount that would be paid on
redemption, liquidation or otherwise, plus accrued and unpaid Distributions to
the date upon which the voting percentages are determined) represents 10% or
more of the liquidation amount of all outstanding Securities of such class.
"Transfer Restriction Termination Date" means the first date on which
the Securities and any Common Stock issued or issuable upon the conversion or
exchange thereof (other than (i) Securities acquired by the Trust or any
Affiliate thereof and (ii) Common Stock issued upon the conversion or exchange
of any Security described in clause (i) above) may be sold pursuant to Rule
144(k).
"Treasury Regulations" means the income tax regulations including
temporary and proposed regulations, promulgated under the Code by the United
States Treasury, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
"Trustee" or "Trustees" means each Person who has signed this
Declaration as a trustee, so long as such Person shall continue in office in
accordance with the terms hereof, and all other Persons who may from time to
time be duly appointed, qualified and serving as Trustees in accordance with the
provisions hereof, and references herein to a Trustee or the Trustees shall
refer to such Person or Persons solely in their capacity as trustees hereunder.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended.
ARTICLE 2
TRUST INDENTURE ACT
SECTION 2.01. Trust Indenture Act; Application.
(a) This Declaration is subject to the provisions of the Trust
Indenture Act that are required to be part of this Declaration and shall, to the
extent applicable, be governed by such provisions;
(b) if and to the extent that any provision of this Declaration limits,
qualifies or conflicts with the duties imposed by ss.ss.310 to 317, inclusive,
of the Trust Indenture Act, such imposed duties shall control;
(c) the Property Trustee, to the extent permitted by applicable law
and/or the rules and regulations of the Commission, shall be the only Trustee
which is a trustee for the purposes of the Trust Indenture Act; and
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(d) the application of the Trust Indenture Act to this Declaration
shall not affect the nature of the Securities as equity securities representing
undivided beneficial interests in the assets of the Trust.
SECTION 2.02. Lists of Holders of Preferred Securities.
(a) Each of the Sponsor and the Regular Trustees on behalf of the Trust
shall provide the Property Trustee with such information as is required under
ss. 312(a) of the Trust Indenture Act at the times and in the manner provided in
ss. 312(a); and
(b) the Property Trustee shall comply with its obligations under ss.ss.
310(b), 311 and 312(b) of the Trust Indenture Act.
SECTION 2.03. Reports by the Property Trustee. Within 60 days after May
15 of each year, commencing May 1998, the Property Trustee shall provide to the
Holders of the Securities such reports as are required by ss. 313 of the Trust
Indenture Act, if any, in the form, in the manner and at the times provided by
ss. 313 of the Trust Indenture Act. The Property Trustee shall also comply with
the requirements of ss. 313(d) of the Trust Indenture Act.
SECTION 2.04. Periodic Reports to Property Trustee. Each of the Sponsor
and the Regular Trustees on behalf of the Trust shall provide to the Property
Trustee, the Commission and the Holders of the Securities, as applicable, such
documents, reports and information as required by ss. 314(a)(1)-(3) (if any) of
the Trust Indenture Act and the compliance certificates required by ss.
314(a)(4) and (c) of the Trust Indenture Act, any such certificates to be
provided in the form, in the manner and at the times required by ss. 314(a)(4)
and (c) of the Trust Indenture Act (provided that any certificate to be provided
pursuant to ss. 314(a)(4) of the Trust Indenture Act shall be provided within
120 days of the end of each Fiscal Year).
SECTION 2.05. Evidence of Compliance with Conditions Precedent. Each of
the Sponsor and the Regular Trustees on behalf of the Trust shall provide to the
Property Trustee such evidence of compliance with any conditions precedent, if
any, provided for in this Declaration which relate to any of the matters set
forth in ss. 314(c) of the Trust Indenture Act. Any certificate or opinion
required to be given pursuant to ss. 314(c) shall comply with ss. 314(e) of the
Trust Indenture Act.
SECTION 2.06. Events of Default; Waiver. (a) Subject to Section
2.06(c), Holders of Preferred Securities may, by vote of at least a Majority in
liquidation amount of the Preferred Securities (A) in accordance with the terms
of the
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Preferred Securities, direct the time, method and place of conducting any
proceeding for any remedy available to the Property Trustee, or exercising any
trust or power conferred upon the Property Trustee, or (B) on behalf of the
Holders of all Preferred Securities, waive any past Event of Default in respect
of the Preferred Securities and its consequences; provided that if the Event of
Default arises out of an Indenture Event of Default:
(i) which is not waivable under the Indenture, the Event of
Default under this Declaration shall also be not waivable; or
(ii) which requires the consent or vote of (1) holders of
Debentures representing a specified percentage greater than a majority
in principal amount of the Debentures, or (2) each holder of
Debentures, the Event of Default under this Declaration may only be
waived by, in the case of clause (1) above, the vote of Holders of
Preferred Securities representing such specified percentage of the
aggregate liquidation amount of the Preferred Securities or, in the
case of clause (2) above, each Holder of Preferred Securities.
Upon such waiver, any such default shall cease to exist, and any Event
of Default with respect to the Preferred Securities arising therefrom shall be
deemed to have been cured for every purpose of this Declaration, but no such
waiver shall extend to any subsequent or other default or Event of Default with
respect to the Preferred Securities or impair any right consequent thereon.
(b) Subject to Section 2.06(c), Holders of Common Securities may by
vote of at least a Majority in liquidation amount of the Common Securities, (A)
in accordance with the terms of the Common Securities, direct the time, method
and place of conducting any proceeding for any remedy available to the Property
Trustee or exercising any trust or power conferred upon the Property Trustee or
(B) on behalf of the Holders of all of the Common Securities, waive any past
Event of Default with respect to the Common Securities and its consequences,
provided that, if the Event of Default arises out of an Indenture Event of
Default:
(i) which is not waivable under the Indenture, except where the
Holders of the Common Securities are deemed to have waived such Event
of Default under the Declaration as provided below, the Event of
Default under this Declaration shall also not be waivable; or
(ii) which requires the consent or vote of (1) holders of
Debentures representing a specified percentage greater than a majority
in principal amount of the Debentures or (2) each holder of Debentures,
except where the holders of the Common Securities are deemed to have
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waived such Event of Default under this Declaration as provided below,
the Event of Default under this Declaration may only be waived by, in
the case of clause (1) above, the vote of Holders of Common Securities
representing such specified percentage of the aggregate liquidation
amount of the Common Securities or, in the case of clause (2) above,
each holder of Common Securities; and
provided, further, that each Holder of Common Securities will be deemed to have
waived any Event of Default with respect to the Common Securities and its
consequences until all Events of Default with respect to the Preferred
Securities have been cured, waived by the Holders of Preferred Securities as
provided in this Declaration or otherwise eliminated and until all Events of
Default with respect to the Preferred Securities have been so cured, waived or
otherwise eliminated, the Property Trustee will be deemed to be acting solely on
behalf of the Holders of the Preferred Securities and only the Holders of the
Preferred Securities will have the right to direct the Property Trustee in
accordance with the terms of this Declaration or the Securities. In the event
that any Event of Default with respect to the Preferred Securities is waived by
the Holders of Preferred Securities as provided in this Declaration, the Holders
of Common Securities agree that such waiver shall also constitute the waiver of
such Event of Default with respect to the Common Securities for all purposes
under this Declaration without any further act, vote or consent of the Holders
of the Common Securities. Subject to the foregoing provisions of this Section
2.06(b), upon such waiver, any such default shall cease to exist and any Event
of Default with respect to the Common Securities arising therefrom shall be
deemed to have been cured for every purpose of this Declaration, but no such
waiver shall extend to any subsequent or other default or Event of Default with
respect to the Common Securities or impair any right consequent thereon.
(c) The right of any Holder of Securities to receive payment of
Distributions on the Securities in accordance with this Declaration and the
terms of the Securities set forth in Exhibits B and C on or after the respective
payment dates therefor, or to institute suit for the enforcement of any such
payment on or after such payment dates, shall not be impaired without the
consent of such Holder.
(d) As provided in the terms of the Securities set forth in Exhibits B
and C hereto, a waiver of an Indenture Event of Default by the Property Trustee
at the written direction of the Holders of the Preferred Securities constitutes
a waiver of the corresponding Event of Default under this Declaration in respect
of the Securities.
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SECTION 2.07. Disclosure of Information. The disclosure of information
as to the names and addresses of the Holders of the Securities in accordance
with ss. 312 of the Trust Indenture Act, regardless of the source from which
such information was derived, shall not be deemed to be a violation of any
existing law, or any law hereafter enacted which does not specifically refer to
ss. 312 of the Trust Indenture Act, nor shall the Property Trustee be held
accountable by reason of mailing any material pursuant to a request made under
ss. 312(b) of the Trust Indenture Act.
ARTICLE 3
ORGANIZATION
SECTION 3.01. Name. The Trust continued by this Declaration is named
"AES Trust II" as such name may be modified from time to time by the Regular
Trustees following written notice to the Holders of Securities. The Trust's
activities may be conducted under the name of the Trust or any other name deemed
advisable by the Regular Trustees.
SECTION 3.02. Office. The address of the principal office of the Trust
is c/o The AES Corporation, 1001 North 19th Street, Arlington, Virginia 22209.
Upon ten days' written notice to the Holders, the Regular Trustees may change
the location of the Trust's principal office.
SECTION 3.03. Issuance of the Trust Securities. On October 23, 1997 the
Sponsor, on behalf of the Trust and pursuant to the Original Declaration,
executed and delivered the Purchase Agreement. On the Closing Date and
contemporaneously with the execution and delivery of this Declaration, the
Regular Trustees, on behalf of the Trust, shall execute and deliver to (i) the
Initial Purchasers named in the Purchase Agreement, Global Certificates
registered in the name of the nominee of the initial Clearing Agency as
specified in Section 9.04, and, as the case may be, Definitive Preferred
Security Certificates, in an aggregate amount of 6,000,000 Preferred Securities
having an aggregate liquidation amount of $300,000,000, against receipt of the
aggregate purchase price of such Preferred Securities of $300,000,000, and (ii)
the Sponsor, Common Securities Certificates, registered in the name of the
Sponsor, in an aggregate amount of 185,568 Common Securities having an aggregate
liquidation amount of $9,278,400, against receipt of the aggregate purchase
price of such Common Securities of $9,278,400. In the event and to the extent
the overallotment option granted by the Trust pursuant to the Purchase Agreement
is exercised by such Initial Purchasers, on the Option Closing Date the Regular
Trustees, on behalf of the Trust, shall execute and deliver to (i) such Initial
Purchasers Global Certificates registered in
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the name of the nominee of the initial Clearing Agency as specified in Section
9.04 and Definitive Preferred Security Certificates, as the case may be, in an
aggregate amount of up to 900,000 Preferred Securities having an aggregate
liquidation amount of up to $45,000,000 against receipt of the aggregate
purchase price of such Preferred Securities of up to $45,000,000, and (ii) the
Sponsor, Common Security Certificates, registered in the name of the Sponsor, in
an aggregate amount of 27,836 Common Securities having an aggregate liquidation
of $1,391,800, against receipt of the aggregate purchase price of such Common
Securities of up to $1,391,800.
SECTION 3.04. Purchase of Debentures. On the Closing Date and
contemporaneously with the execution and delivery of this Declaration, the
Regular Trustees, on behalf of the Trust, shall purchase from the Sponsor with
the proceeds received by the Trust from the sale of the Securities on such date
pursuant to Section 3.03, at a purchase price of 100% of the principal amount
thereof, Debentures, registered in the name of the Property Trustee, acting in
such capacity, and having an aggregate principal amount equal to $309,278,400,
and, in satisfaction of the purchase price for such Debentures, the Regular
Trustee, on behalf of the Trust, shall deliver or cause to be delivered to the
Sponsor the sum of $309,278,400. In the event the overallotment option granted
by the Trust with respect to the Preferred Securities pursuant to the Purchase
Agreement is exercised by the Initial Purchasers named therein, on the Option
Closing Date the Regular Trustees, on behalf of the Trust, shall purchase from
the Sponsor with the proceeds received by the Trust from the sale of the
Preferred Securities on such date pursuant to Section 3.03, at a purchase price
of 100% of the principal amount thereof, additional Debentures, registered in
the name of the Property Trustee, acting in such capacity, and having an
aggregate principal amount of up to $46,391,800, and, in satisfaction of the
purchase price for such Debentures, the Regular Trustees, on behalf of the
Trust, shall deliver or cause to be delivered to the Sponsor an amount equal to
the aggregate principal amount of the Debentures being purchased.
SECTION 3.05. Purpose. The exclusive purposes and functions of the
Trust are: (a)(i) to issue and sell Preferred Securities for cash and use the
proceeds of such sales to acquire from AES Debentures issued under the Indenture
having an aggregate principal amount equal to the aggregate liquidation amount
of the Preferred Securities so issued and sold; (ii) to enter into such
agreements and arrangements as may be necessary in connection with the sale of
Preferred Securities to the initial purchasers thereof (including the Purchase
Agreement) and to take all action, and exercise such discretion, as may be
necessary or desirable in connection therewith and to file such registration
statements or make such other filings under the Securities Act, the Exchange Act
or state securities or "Blue Sky" laws as may be necessary or desirable in
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connection therewith and the issuance of the Preferred Securities; and (iii) to
issue and sell Common Securities to AES for cash and use the proceeds of such
sale to purchase as trust assets an equal aggregate principal amount of
Debentures issued under the Indenture; and (b) except as otherwise limited
herein, to engage in only those other activities necessary, convenient or
incidental thereto. The Trust shall not borrow money, issue debt or reinvest
proceeds derived from investments, pledge any of its assets or at any time while
the Securities are outstanding, otherwise undertake (or permit to be undertaken)
any activity that would result in or cause the Trust to be treated as anything
other than a grantor trust for United States federal income tax purposes.
SECTION 3.06. Authority. Subject to the limitations provided in this
Declaration and to the specific duties of the Property Trustee, the Regular
Trustees shall have exclusive and complete authority to carry out the purposes
of the Trust. An action taken by the Regular Trustees in accordance with their
powers shall constitute the act of and serve to bind the Trust and an action
taken by the Property Trustee in accordance with its powers shall constitute the
act of and serve to bind the Trust. In dealing with the Trustees acting on
behalf of the Trust, no Person shall be required to inquire into the authority
of the Trustees to bind the Trust. Persons dealing with the Trust are entitled
to rely conclusively on the power and authority of the Trustees as set forth in
this Declaration.
SECTION 3.07. Title to Property of the Trust. Except as provided in
Section 3.10 with respect to the Debentures and the Property Account or unless
otherwise provided in this Declaration, legal title to all assets of the Trust
shall be vested in the Trust. The Holders shall not have legal title to any part
of the assets of the Trust, but shall have an individual undivided beneficial
interest in the assets of the Trust.
SECTION 3.08. Powers and Duties of the Regular Trustees. The Regular
Trustees shall have the exclusive power, authority and duty to cause the Trust,
and shall cause the Trust, to engage in the following activities:
(a) to issue Preferred Securities and Common Securities, in each case
in accordance with this Declaration; provided, however, that the Trust may issue
no more than one series of Preferred Securities and no more than one series of
Common Securities, and, provided further, that there shall be no interests in
the Trust other than the Securities and the issuance of Securities shall be
limited to (x) a one-time, simultaneous issuance of both Preferred Securities
and Common Securities on the Closing Date and (y) any subsequent issuance of
Preferred Securities on the Option Closing Date pursuant to an exercise of the
over-allotment option granted to Initial Purchasers in the Purchase Agreement;
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(b) in connection with the issuance of the Preferred Securities, at the
direction of the Sponsor, to effect or cause to be effected the filings, if
necessary, and to execute, deliver and perform on behalf of the Trust the
Depositary Agreement;
(c) to acquire as trust assets Debentures with the proceeds of the sale
of the Preferred Securities and Common Securities; provided, however, that the
Regular Trustees shall cause legal title to all of the Debentures to be vested
in, and the Debentures to be held of record in the name of, the Property Trustee
for the benefit of the Trust and the Holders of the Preferred Securities and the
Common Securities;
(d) to cause the Trust to enter into the Purchase Agreement and such
other agreements and arrangements as may be necessary or desirable in connection
with the sale of Preferred Securities to the initial purchasers thereof and the
consummation thereof, and to take all action, and exercise all discretion, as
may be necessary or desirable in connection with the consummation thereof;
(e) to give the Sponsor and the Property Trustee prompt written notice
of the occurrence of a Special Event; provided, that the Regular Trustees shall
consult with the Sponsor and the Property Trustee before taking or refraining to
take any Ministerial Action in relation to a Special Event;
(f) to establish a record date with respect to all actions to be taken
hereunder that require a record date be established, including for the purposes
of Section 316(c) of the Trust Indenture Act and with respect to Distributions,
voting rights, redemptions, and exchanges, and to issue relevant notices to
Holders of the Preferred Securities and Common Securities as to such actions and
applicable record dates;
(g) to bring or defend, pay, collect, compromise, arbitrate, resort to
legal action or otherwise adjust claims or demands of or against the Trust
("Legal Action"), unless pursuant to Section 3.10(e), the Property Trustee has
the exclusive power to bring such Legal Action;
(h) to employ or otherwise engage employees and agents (who may be
designated as officers with titles) and managers, contractors, advisors and
consultants and pay reasonable compensation for such services;
(i) to cause the Trust to comply with the Trust's obligations under
the Trust Indenture Act;
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(j) to give the certificate to the Property Trustee required by ss.
314(a)(4) of the Trust Indenture Act, which certificate may be executed by any
Regular Trustee;
(k) to incur expenses which are necessary or incidental to carrying out
any of the purposes of the Trust;
(l) to act as, or appoint another Person to act as, registrar and
transfer agent for the Securities, the Regular Trustees hereby initially
appointing the Property Trustee for such purposes;
(m) to take all actions and perform such duties as may be required of
the Regular Trustee pursuant to the terms of the Securities set forth in
Exhibits B and C hereto;
(n) to execute all documents or instruments, perform all duties and
powers and do all things for and on behalf of the Trust in all matters necessary
or incidental to the foregoing;
(o) to take all action which may be necessary or appropriate for the
preservation and the continuation of the Trust's valid existence, rights,
franchises and privileges as a statutory business trust under the laws of the
State of Delaware and of each other jurisdiction in which such existence is
necessary to protect the limited liability of the Holders of the Securities or
to enable the Trust to effect the purposes for which the Trust has been created;
(p) to take all action, not inconsistent with this Declaration or with
applicable law, which the Regular Trustees determine in their discretion to be
reasonable and necessary or desirable in carrying out the activities of the
Trust as set out in this Section 3.08, in order that:
(i) the Trust will not be deemed to be an Investment Company
required to be registered under the Investment Company Act;
(ii) the Trust will not be classified for United States federal
income tax purposes as an association taxable as a corporation or a
partnership and will be treated as a grantor trust for United States
federal income tax purposes; and
(iii) the Trust will comply with any requirements imposed by any
taxing authority on holders of instruments treated as indebtedness for
United States federal income tax purposes;
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provided that such action does not adversely affect the interests of Holders;
(q) to take all action necessary to cause all applicable tax returns
and tax information reports that are required to be filed with respect to the
Trust to be duly prepared and filed by the Regular Trustees, on behalf of the
Trust; and
(r) subject to the requirements of Rule 3a-7 and ss. 317(b) of the
Trust Indenture Act, to appoint one or more Paying Agents in addition to the
Property Trustee.
The Regular Trustees must exercise the powers set forth in this Section
3.08 in a manner which is consistent with the purposes and functions of the
Trust set out in Section 3.05 and the Regular Trustees shall not take any action
which is inconsistent with the purposes and functions of the Trust set forth in
Section 3.05.
Subject to this Section 3.08, the Regular Trustees shall have none of
the powers nor any of the authority of the Property Trustee set forth in Section
3.10.
SECTION 3.09. Prohibition of Actions by Trust and Trustees. The Trust
shall not, and the Trustees (including the Property Trustee) shall cause the
Trust not to, engage in any activity other than as required or authorized by
this Declaration. In particular, the Trust shall not and the Trustees (including
the Property Trustee) shall not cause the Trust to:
(a) invest any proceeds received by the Trust from holding the
Debentures but shall promptly distribute all such proceeds to Holders of
Securities pursuant to the terms of this Declaration and of the Securities;
(b) acquire any assets other than as expressly provided herein;
(c) possess Trust property for other than a Trust purpose;
(d) make any loans, other than loans represented by the Debentures;
(e) possess any power or otherwise act in such a way as to vary the
Trust assets or the terms of the Securities in any way whatsoever;
(f) issue any securities or other evidences of beneficial ownership of,
or beneficial interests in, the Trust other than the Securities;
(g) incur any indebtedness for borrowed money; or
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(h) (i) direct the time, method and place of exercising any trust or
power conferred upon the Debenture Trustee with respect to the Debentures, (ii)
waive any past default that is waivable under Section 6.06 of the Indenture,
(iii) exercise any right to rescind or annul any declaration that the principal
of all of the Debentures shall be due and payable or (iv) consent to any
amendment, modification or termination of the Indenture or the Debentures, where
such consent shall be required, unless in the case of this clause (h) the
Property Trustee shall have received an unqualified opinion of nationally
recognized independent tax counsel recognized as expert in such matters to the
effect that such action will not cause the Trust to be classified for United
States federal income tax purposes as an association taxable as a corporation or
partnership and that the Trust will continue to be classified as a grantor trust
for United States federal income tax purposes.
SECTION 3.10. Powers and Duties of the Property Trustee. (a) The legal
title to the Debentures shall be owned by and held of record in the name of the
Property Trustee in trust for the benefit of the Trust and the Holders of the
Securities. The right, title and interest of the Property Trustee to the
Debentures shall vest automatically in each Person who may hereafter be
appointed as Property Trustee in accordance with Article 5. Such vesting and
cessation of title shall be effective whether or not conveyancing documents have
been executed and delivered.
(b) The Property Trustee shall not transfer its right, title and
interest in the Debentures to the Regular Trustees or, if the Property Trustee
does not also act as the Delaware Trustee, the Delaware Trustee.
(c) The Property Trustee shall:
(i) establish and maintain a segregated non-interest bearing bank
account (the "Property Account") in the name of and under the exclusive
control of the Property Trustee on behalf of the Holders of the
Securities and on the receipt of payments of funds made in respect of
the Debentures held by the Property Trustee, deposit such funds into
the Property Account and, without any further acts of the Property
Trustee or the Regular Trustees, promptly make payments to the Holders
of the Preferred Securities and Common Securities from the Property
Account in accordance with Section 6.01. Funds in the Property Account
shall be held uninvested, and without liability for interest thereon,
until disbursed in accordance with this Declaration. The Property
Account shall be an account which is maintained with a banking
institution whose long term unsecured indebtedness is rated by a
"nationally recognized statistical rating organization", as such term
is defined for purposes of Rule
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436(g)(2) under the Securities Act, at least equal to (but in no event
less than "A" or the equivalent) the rating assigned to the Preferred
Securities by a nationally recognized statistical rating organization;
(ii) engage in such ministerial activities as shall be necessary
or appropriate to effect promptly the redemption of the Preferred
Securities and the Common Securities to the extent the Debentures are
redeemed or mature;
(iii) upon notice of distribution issued by the Regular Trustees
in accordance with the terms of the Preferred Securities and the Common
Securities, engage in such ministerial activities as shall be necessary
or appropriate to effect promptly the distribution pursuant to terms of
the Securities of Debentures to Holders of Securities upon the
occurrence of a Special Event; and
(iv) have the legal power to exercise all of the rights, powers
and privileges of a holder of the Debentures under the Indenture and,
if an Event of Default occurs and is continuing, the Property Trustee,
subject to Section 2.06(b), shall for the benefit of the Holders of the
Securities, enforce its rights as holder of the Debentures under the
Indenture, subject to the rights of the Holders of the Preferred
Securities pursuant to the terms of this Declaration, the Business
Trust Act and the Trust Indenture Act.
(d) The Property Trustee shall take all actions and perform such duties
as may be specifically required of the Property Trustee pursuant to the terms of
the Securities set forth in Exhibits B and C hereto.
(e) The Property Trustee shall take any Legal Action which arises out
of or in connection with an Event of Default or the Property Trustee's duties
and obligations under this Declaration, the Business Trust Act or the Trust
Indenture Act; provided however, that the holders of a Majority in liquidation
amount of the Preferred Securities will have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Property Trustee or to direct the exercise of any trust or power conferred upon
the Property Trustee under the Declaration, including the right to direct the
Property Trustee to exercise the remedies available to it as a holder of the
Debentures. If the Property Trustee fails to enforce its rights under the
Debentures, a Holder of Preferred Securities, to the extent permitted by law,
may institute a legal proceeding directly against AES to enforce the Property
Trustee's rights under the Debentures without first instituting any legal
proceeding against the Property Trustee or any other Person; provided further,
that, if an Event of Default has occurred and is continuing and
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such event is attributed to the failure of the Sponsor to pay interest or
principal on the Debentures on the date such interest or principal is otherwise
payable (or in the case of redemption, on the redemption date), then a Holder of
Preferred Securities may directly institute a proceeding for enforcement of
payment to such Holder of the principal of or interest on the Debentures having
a principal amount equal to the aggregate liquidation amount of the Preferred
Securities of such Holder (a "Holder Direct Action") on or after the respective
due date specified in the Debentures. In connection with such Holder Direct
Action, the rights of the Holders of the Common Securities will be subrogated to
the rights of such Holder of Preferred Securities to the extent of any payment
made by the Sponsor to such Holders of Preferred Securities in such Holder
Direct Action. Except as provided in the preceding sentences, the Holders of
Preferred Securities will not be able to exercise directly any remedy available
to the Holders of the Debentures.
(f) All moneys deposited in the Property Account, and all Debentures
held by the Property Trustee for the benefit of the Holders of the Securities
will not be subject to any right, charge, security interest, lien or claim of
any kind in favor of, or for the benefit of the Property Trustee or its agents
or their creditors.
(g) The Property Trustee shall, within 90 days after the occurrence of
a default with respect to the Securities known to the Property Trustee, transmit
by mail, first class postage prepaid, to the holders of the Securities, as their
names and addresses appear upon the register, notice of all such defaults with
respect to the Securities, unless such defaults shall have been cured before the
giving of such notice (the term "defaults" for the purposes of this Section
3.10(g) being hereby defined to be an Indenture Event of Default, not including
any periods of grace provided for in the Indenture and irrespective of the
giving of any notice provided therein); provided, that, except in the case of
default in the payment of the principal of (or premium, if any) or interest on
any of the Debentures, the Property Trustee shall be protected in withholding
such notice if and so long as the board of directors, the executive committee or
a trust committee of directors and/or Responsible Officers, of the Property
Trustee in good faith determines that the withholding of such notice is in the
interests of the Holders of the Securities. The Property Trustee shall not be
deemed to have knowledge of any default, except (i) a default in the payment of
principal, premium or interest on the Debentures or (ii) any default as to which
the Property Trustee shall have received written notice or a Responsible Officer
charged with the administration of this Declaration shall have obtained written
notice.
(h) The Property Trustee shall continue to serve as a Trustee until
either:
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(i) the Trust has been completely liquidated and the proceeds
thereof distributed to the Holders of Securities pursuant to the terms
of the Securities; or
(ii) a Successor Property Trustee has been appointed and accepted
that appointment in accordance with Article 5.
(i) The Property Trustee shall act as paying agent in respect of the
Common Securities and the Preferred Securities and, subject to Section 3.08(r),
may authorize one or more Persons (each, a "Paying Agent") to pay Distributions,
redemption payments or liquidation payments on behalf of the Trust with respect
to the Preferred Securities. Any such Paying Agent shall comply with ss. 317(b)
of the Trust Indenture Act. Any Paying Agent may be removed by the Property
Trustee, after consultation with the Regular Trustees, at any time and a
successor Paying Agent or additional Paying Agents may be appointed at any time
by the Property Trustee, subject to Section 3.08(r).
(j) The Property Trustee shall give prompt written notice to the
Holders of the Securities of any notice received by it from AES of its election
to defer payments of interest on the Debentures by extending the interest
payment period with respect thereto.
(k) Subject to this Section 3.10, the Property Trustee shall have none
of the powers or the authority of the Regular Trustees set forth in Section
3.08.
(l) The Property Trustee shall exercise the powers, duties and rights
set forth in this Section 3.10 and Section 3.12 in a manner which is consistent
with the purposes and functions of the Trust set out in Section 3.05, and the
Property Trustee shall not take any action which is inconsistent with the
purposes and functions of the Trust set forth in Section 3.05.
SECTION 3.11. Delaware Trustee. Notwithstanding any other provision of
this Declaration other than Section 5.01(a)(3), the Delaware Trustee shall not
be entitled to exercise any powers, nor shall the Delaware Trustee have any of
the duties and responsibilities described in this Declaration (except as
required under the Business Trust Act) . Except as set forth in Section
5.01(a)(3), the Delaware Trustee shall be a Trustee for the sole and limited
purpose of fulfilling the requirements of ss. 3807 of the Business Trust Act. No
implied covenants or obligations shall be read into this Declaration against the
Delaware Trustee.
SECTION 3.12. Certain Rights and Duties of the Property Trustee. (a)
The Property Trustee, before the occurrence of an Event of Default and after the
curing of all Events of Default that may have occurred, shall undertake to
perform only
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such duties as are specifically set forth in this Declaration, and no implied
covenants shall be read into this Declaration against the Property Trustee. In
case an Event of Default has occurred (that has not been cured or waived
pursuant to Section 2.06), the Property Trustee shall exercise such of the
rights and powers vested in it by this Declaration, and use the same degree of
care and skill in their exercise, as a prudent person would exercise or use
under the circumstances in the conduct of his or her own affairs.
(b) No provision of this Declaration shall be construed to relieve the
Property Trustee from liability for its own negligent action, its own negligent
failure to act or its own willful misconduct, except that:
(i) prior to the occurrence of an Event of Default and after the
curing or waiving of all such Events of Default that may have occurred:
(A) the duties and obligations of the Property Trustee shall
be determined solely by the express provisions of this
Declaration, and the Property Trustee shall not be liable except
for the performance of such duties and obligations as are
specifically set forth in this Declaration, and no implied
covenants or obligations shall be read into this Declaration
against the Property Trustee; and
(B) in the absence of bad faith on the part of the Property
Trustee, the Property Trustee may conclusively rely, as to the
truth of the statements and the correctness of the opinions
expressed therein, upon any certificates or opinions furnished to
the Property Trustee and conforming to the requirements of this
Declaration; but in the case of any such certificates or opinions
that by any provision hereof are specifically required to be
furnished to the Property Trustee, the Property Trustee shall be
under a duty to examine the same to determine whether or not they
conform to the requirements of this Declaration;
(ii) the Property Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the Property
Trustee, unless it shall be proved that the Property Trustee was
negligent in ascertaining the pertinent facts;
(iii) the Property Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance
with the direction of the Holders as provided herein relating to the
time, method and place of conducting any proceeding for any remedy
available to the
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Property Trustee hereunder or under the Indenture, or exercising any
trust or power conferred upon the Property Trustee under this
Declaration; and
(iv) no provision of this Declaration shall require the Property
Trustee to expend or risk its own funds or otherwise incur personal
financial liability in the performance of any of its duties or in the
exercise of any of its rights or powers, if it shall have reasonable
ground for believing that the repayment of such funds or liability is
not reasonably assured to it under the terms of this Declaration or
adequate indemnity against such risk or liability is not reasonably
assured to it.
(c) Subject to the provisions of Section 3.12(a) and (b):
(i) whenever in the administration of this Declaration, the
Property Trustee shall deem it desirable that a matter be proved or
established prior to taking, suffering or omitting any action
hereunder, the Property Trustee (unless other evidence is herein
specifically prescribed) may, in the absence of bad faith on its part
and, if the Trust is excluded from the definition of Investment Company
solely by means of Rule 3a-7, subject to the requirements of Rule 3a-7,
request and rely upon a certificate, which shall comply with the
provisions of ss. 314(e) of the Trust Indenture Act, signed by any two
of the Regular Trustees or by an authorized officer of the Sponsor, as
the case may be;
(ii) The Property Trustee (A) may consult with counsel (which may
be counsel to the Sponsor or any of its Affiliates and may include any
of its employees) selected by it in good faith and with due care and
the written advice or opinion of such counsel with respect to legal
matters shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted by it hereunder in
good faith and in reliance thereon and in accordance with such advice
and opinion and (B) shall have the right at any time to seek
instructions concerning the administration of this Declaration from any
court of competent jurisdiction;
(iii) The Property Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys and the Property Trustee shall not be
responsible for any misconduct or negligence on the part of any agent
or attorney appointed by it in good faith and with due care;
(iv) The Property Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Declaration at the
request or
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direction of any Holders, unless such Holders shall have offered to
the Property Trustee reasonable security and indemnity against the
costs, expenses (including attorneys' fees and expenses) and
liabilities that might be incurred by it in complying with such
request or direction; provided that nothing contained in this clause
(iv) shall relieve the Property Trustee of the obligation, upon the
occurrence of an Event of Default (which has not been cured or waived)
to exercise such of the rights and powers vested in it by this
Declaration, and to use the same degree of care and skill in this
exercise, as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs; and
(v) Any action taken by the Property Trustee or its agents
hereunder shall bind the Holders of the Securities and the signature of
the Property Trustee or its agents alone shall be sufficient and
effective to perform any such action; and no third party shall be
required to inquire as to the authority of the Property Trustee to so
act, or as to its compliance with any of the terms and provisions of
this Declaration, both of which shall be conclusively evidenced by the
Property Trustee's or its agent's taking such action.
SECTION 3.13. Filing of Amendments to Certificate of Trust. The
Restated Certificate of Trust as filed with the Secretary of State of the State
of Delaware on November 1, 1996 and restated on March 27, 1997 is attached
hereto as Exhibit A. On or after the date of execution of this Declaration, the
Trustees shall cause the filing with the Secretary of State of the State of
Delaware of such amendments to the Certificate of Trust as the Trustees shall
deem necessary or desirable.
SECTION 3.14. Execution of Documents by Regular Trustees. Unless
otherwise determined by the Regular Trustees and except as otherwise required by
the Business Trust Act with respect to the Certificate of Trust or otherwise, a
majority of, or if there are only two, both of, the Regular Trustees are
authorized to execute and deliver on behalf of the Trust any documents which the
Regular Trustees have the power and authority to execute or deliver pursuant to
this Declaration.
SECTION 3.15. Trustees Not Responsible for Recitals or Issuance of
Securities. The recitals contained in this Declaration and the Securities shall
be taken as the statements of the Sponsor, and the Trustees do not assume any
responsibility for their correctness. The Trustees make no representations as to
the value or condition of the property of the Trust or any part thereof. The
Trustees make no representations as to the validity or sufficiency of this
Declaration or the Securities.
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SECTION 3.16. Duration of Trust. The Trust, absent termination pursuant
to the provisions of Article 8 hereof, shall have existence until November 1,
2031.
ARTICLE 4
SPONSOR
SECTION 4.01. Purchase of Common Securities by Sponsor. On the Closing
Date the Sponsor will purchase all of the Common Securities issued by the Trust
at the same time as the Preferred Securities to be issued on such date are
issued, such purchase to be in an amount equal to 3% of the total capital of the
Trust (including for this purpose the maximum amount of Preferred Securities, if
any, which may be issued on the Option Closing Date pursuant to the exercise of
the overallotment option set forth in the Purchase Agreement).
SECTION 4.02. Expenses. (a) In connection with the purchase of the
Debentures by the Trust, the Sponsor, in its capacity as Sponsor and not as a
Holder, shall be responsible for and shall pay for all debts and obligations
(other than with respect to the Securities) and all costs and expenses of the
Trust (including, but not limited to, costs and expenses relating to the
organization of the Trust, the issuance of the Preferred Securities to initial
purchasers thereof, the fees and expenses (including reasonable counsel fees and
expenses) of the Trustees (including any amounts payable under Article 10), the
costs and expenses relating to the operation of the Trust, including without
limitation, costs and expenses of accountants, attorneys, statistical or
bookkeeping services, expenses for printing and engraving and computing or
accounting equipment, paying agent(s), registrar(s), transfer agent(s),
duplicating, travel and telephone and other telecommunications expenses and
costs and expenses incurred in connection with the disposition of Trust assets).
(b) In connection with the purchase of the Debentures by the Trust,
the Sponsor, in its capacity as Sponsor and not as a Holder, will pay any and
all taxes (other than United States withholding taxes attributable to the Trust
or its assets) and all liabilities, costs and expenses with respect to such
taxes of the Trust.
(c) The Sponsor's obligations under this Section 4.02 shall be for the
benefit of, and shall be enforceable by, any Person to whom any such debts,
obligations, costs, expenses and taxes are owed (a "Creditor") whether or not
such Creditor has received notice hereof. Any such Creditor may enforce the
Sponsor's obligations under this Section 4.02 directly against the Sponsor and
the Sponsor irrevocably waives any right or remedy to require that any such
Creditor take any action against the Trust or any other Person before proceeding
against the
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Sponsor. The Sponsor agrees to execute such additional agreements as may be
necessary or desirable in order to give full effect to the provisions of this
Section 4.02.
ARTICLE 5
TRUSTEES
SECTION 5.01. Number of Trustees; Qualifications. (a) The number of
Trustees initially shall be five (5). At any time (i) before the issuance of the
Securities, the Sponsor may, by written instrument, increase or decrease the
number of, and appoint, remove and replace the Trustees, and (ii) after the
issuance of the Securities the number of Trustees may be increased or decreased
solely by, and Trustees may be appointed, removed or replaced solely by, vote of
Holders of Common Securities representing a Majority in liquidation amount of
the Common Securities voting as a class; provided that in any case:
(i) the number of Trustees shall be at least five (5) unless the
Trustee that acts as the Property Trustee also acts as the Delaware
Trustee, in which cases the number of Trustees shall be at least four
(4);
(ii) at least a majority of the Trustees shall at all times be
officers, directors or employees of AES;
(iii) if required by the Business Trust Act, one Trustee (the
"Delaware Trustee") shall be either a natural person who is a resident
of the State of Delaware or, if not a natural person, an entity which
has its principal place of business in the State of Delaware and
otherwise is permitted to act as a Trustee hereunder under the laws of
the State of Delaware, except that if the Property Trustee has its
principal place of business in the State of Delaware and otherwise is
permitted to act as a Trustee hereunder under the laws of the State of
Delaware, then the Property Trustee shall also be the Delaware Trustee
and Section 3.11 shall have no application; and
(iv) there shall at all times be a Property Trustee hereunder
which shall satisfy the requirements of Section 5.01(c).
Each of the Regular Trustees and the Delaware Trustee shall be either a natural
person at least 21 years of age or a legal entity which shall act through one or
more duly appointed representatives.
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(b) The initial Regular Trustees shall be:
William R. Luraschi
Willard Hoagland
Barry J. Sharp
c/o THE AES CORPORATION
1001 North 19th Street
Arlington, Virginia 22209
(c) There shall at all times be one Trustee which shall act as Property
Trustee. In order to act as Property Trustee hereunder, such Trustee shall:
(i) not be an Affiliate of the Sponsor;
(ii) be a corporation or national banking association organized
and doing business under the laws of the United States of America or
any State or Territory thereof or of the District of Columbia, or a
corporation, national banking association or Person permitted by the
Commission to act as an institutional trustee under the Trust Indenture
Act, authorized under such laws to exercise corporate trust powers,
having a combined capital and surplus of at least $50,000,000, and
subject to supervision or examination by Federal, State, Territorial or
District of Columbia authority. If such corporation or national banking
association publishes reports of condition at least annually, pursuant
to law or to the requirements of the supervising or examining authority
referred to above, then for the purposes of this Section 5.01(c)(ii),
the combined capital and surplus of such corporation shall be deemed to
be its combined capital and surplus as set forth in its most recent
report of condition so published; and
(iii) if the Trust is excluded from the definition of an
Investment Company solely by reason of Rule 3a-7 and to the extent Rule
3a-7 requires a trustee having certain qualifications to hold title to
the "eligible assets" (as defined in Rule 3a-7) of the Trust, the
Property Trustee shall possess those qualifications.
If at any time the Property Trustee shall cease to satisfy the
requirements of clauses (i)-(iii) above, the Property Trustee shall immediately
resign in the manner and with the effect set out in Section 5.02(d). If the
Property Trustee has or shall acquire any "conflicting interest" within the
meaning of ss. 310(b) of the Trust Indenture Act, the Property Trustee and the
Holders of the Common Securities (as if such Holders were the obligor referred
to in ss. 310(b) of the Trust Indenture Act) shall in all respects comply with
the provisions of ss. 310(b) of the Trust Indenture Act. The Preferred Guarantee
shall be deemed to be specifically
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described in this Declaration for the purposes of clause (i) of the first
proviso contained in ss. 310(b) of the Trust Indenture Act.
The initial Trustee which shall serve as the Property Trustee is The
First National Bank of Chicago, a national banking association, whose address is
as set forth in Section 14.01(b).
(d) The initial Trustee which shall serve as the Delaware Trustee is
First Chicago Delaware Inc., a Delaware corporation, whose address is as set
forth in Section 14.01(c).
(e) Any action taken by Holders of Common Securities pursuant to this
Article 5 shall be taken at a meeting of Holders of Common Securities convened
for such purpose or by written consent as provided in Section 12.02.
(f) No amendment may be made to this Section 5.01 which would change
any rights with respect to the number, existence or appointment and removal of
Trustees, except with the consent of each Holder of Common Securities.
SECTION 5.02. Appointment, Removal and Resignation of Trustees. (a)
Subject to Section 5.02(b), Trustees may be appointed or removed without cause
at any time:
(i) until the issuance of the Securities, by written instrument
executed by the Sponsor; and
(ii) after the issuance of the Securities by vote of the Holders
of a Majority in liquidation amount of the Common Securities voting as
a class.
(b) (i) The Trustee that acts as Property Trustee shall not be removed
in accordance with Section 5.02(a) until a Successor Property Trustee possessing
the qualifications to act as Property Trustee under Section 5.01(c) has been
appointed and has accepted such appointment by written instrument executed by
such Successor Property Trustee and delivered to the Regular Trustees, the
Sponsor and the Property Trustee being removed; and
(ii) the Trustee that acts as Delaware Trustee shall not be
removed in accordance with Section 5.02(a) until a successor Trustee
possessing the qualifications to act as Delaware Trustee under Section
5.1(a)(3) (a "Successor Delaware Trustee") has been appointed and has
accepted such appointment by written instrument executed by such
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Successor Delaware Trustee and delivered to the Regular Trustees, the
Sponsor and the Delaware Trustee being removed.
(c) A Trustee appointed to office shall hold office until his successor
shall have been appointed or until his death, removal or resignation.
(d) Any Trustee may resign from office (without need for prior or
subsequent accounting) by an instrument (a "Resignation Request") in writing
signed by the Trustee and delivered to the Sponsor and the Trust, which
resignation shall take effect upon such delivery or upon such later date as is
specified therein; provided, however, that:
(i) no such resignation of the Trustee that acts as the Property
Trustee shall be effective until:
(A) a Successor Property Trustee possessing the
qualifications to act as Property Trustee under Section 5.01(c)
has been appointed and has accepted such appointment by instrument
executed by such Successor Property Trustee and delivered to the
Trust, the Sponsor and the resigning Property Trustee; or
(B) if the Trust is excluded from the definition of an
Investment Company solely by reason of Rule 3a-7, until the assets
of the Trust have been completely liquidated and the proceeds
thereof distributed to the Holders of the Securities; and
(ii) no such resignation of the Trustee that acts as the Delaware
Trustee shall be effective until a Successor Delaware Trustee has been
appointed and has accepted such appointment by instrument executed by
such Successor Delaware Trustee and delivered to the Trust, the Sponsor
and the resigning Delaware Trustee.
(e) If no Successor Property Trustee or Successor Delaware Trustee
shall have been appointed and accepted appointment as provided in this Section
5.02 within 60 days after delivery to the Sponsor and the Trust of a Resignation
Request, the resigning Property Trustee or Delaware Trustee may petition any
court of competent jurisdiction for appointment of a Successor Property Trustee
or Successor Delaware Trustee. Such court may thereupon after such notice, if
any, as it may deem proper and prescribe, appoint a Successor Property Trustee
or Successor Delaware Trustee, as the case may be.
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SECTION 5.03. Vacancies among Trustees. If a Trustee ceases to hold
office for any reason and the number of Trustees is not reduced pursuant to
Section 5.01 or if the number of Trustees is increased pursuant to Section 5.01,
a vacancy shall occur. A resolution certifying the existence of such vacancy by
a majority of the Regular Trustees shall be conclusive evidence of the existence
of such vacancy. The vacancy shall be filled with a Trustee appointed in
accordance with the requirements of this Article 5.
SECTION 5.04. Effect of Vacancies. The death, resignation, retirement,
removal, bankruptcy, dissolution, liquidation, incompetence or incapacity to
perform the duties of a Trustee, or any one of them, shall not operate to annul
the Trust. Whenever a vacancy in the number of Regular Trustees shall occur
until such vacancy is filled as provided in this Article 5, the Regular Trustees
in office, regardless of their number, shall have all the powers granted to the
Regular Trustees and shall discharge all the duties imposed upon the Regular
Trustees by this Declaration.
SECTION 5.05. Meetings. Meetings of the Regular Trustees shall be held
from time to time upon the call of any Trustee. Regular meetings of the Regular
Trustees may be held at a time and place fixed by resolution of the Regular
Trustees. Notice of any in-person meeting of the Regular Trustees shall be hand
delivered or otherwise delivered in writing (including by facsimile, with a hard
copy by overnight courier) not less than 48 hours before such meeting. Notice of
any telephonic meeting of the Regular Trustees or any committee thereof shall be
hand delivered or otherwise delivered in writing (including by facsimile, with a
hard copy by overnight courier) not less than 24 hours before such meeting.
Notices shall contain a brief statement of the time, place and anticipated
purposes of the meeting. The presence (whether in person or by telephone) of a
Regular Trustee at a meeting shall constitute a waiver of notice of such meeting
except where a Regular Trustee attends a meeting for the express purpose of
objecting to the transaction of any activity on the ground that the meeting has
not been lawfully called or convened. Unless provided otherwise in this
Declaration, any action of the Regular Trustees may be taken at a meeting by
vote of a majority of the Regular Trustees present (whether in person or by
telephone) and eligible to vote with respect to such matter; provided that a
Quorum is present, or without a meeting by the unanimous written consent of the
Regular Trustees.
SECTION 5.06. Delegation of Power. (a) Any Regular Trustee may, by
power of attorney consistent with applicable law, delegate to any other natural
person over the age of 21 his or her power for the purpose of executing any
registration statement or amendment thereto or other document or schedule filed
with the Commission or making any other governmental filing.
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(b) The Regular Trustees shall have power to delegate from time to time
to such of their number or to officers of the Trust the doing of such things and
the execution of such instruments either in the name of the Trust or the names
of the Regular Trustees or otherwise as the Regular Trustees may deem expedient,
to the extent such delegation is not prohibited by applicable law or contrary to
the provisions of the Trust, as set forth herein.
ARTICLE 6
DISTRIBUTIONS
SECTION 6.01. Distributions. Holders shall receive periodic
distributions, redemption payments and liquidation distributions in accordance
with the applicable terms of the relevant Holder's Securities ("Distributions").
Distributions shall be made to the Holders of Preferred Securities and Common
Securities in accordance with the terms of the Securities as set forth in
Exhibits B and C hereto. If and to the extent that AES makes a payment of
interest (including Compounded Interest (as defined in the Indenture)), premium
and principal on the Debentures held by the Property Trustee (the amount of any
such payment being a "Payment Amount"), the Property Trustee shall and is
directed to promptly make a Distribution of the Payment Amount to Holders in
accordance with the terms of the Securities as set forth in Exhibits B and C
hereto.
ARTICLE 7
ISSUANCE OF SECURITIES
SECTION 7.01. General Provisions Regarding Securities. (a) The Regular
Trustees shall issue on behalf of the Trust securities representing undivided
beneficial interests in the assets of the Trust in accordance with Section
7.01(b) and for the consideration specified in Section 3.03.
(b) The Regular Trustees shall issue on behalf of the Trust one class
of preferred securities representing undivided beneficial interests in the
assets of the Trust having such terms as are set forth in Exhibit B (the
"Preferred Securities") which terms are incorporated by reference in, and made a
part of, this Declaration as if specifically set forth herein, and one class of
common securities representing undivided beneficial interests in the assets of
the Trust having such terms as are set forth in Exhibit C (the "Common
Securities") which terms are incorporated by reference in, and made a part of,
this Declaration as if specifically set forth herein.
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The Trust shall have no securities or other interests in the assets of the Trust
other than the Preferred Securities and the Common Securities.
(c) The Certificates shall be signed on behalf of the Trust by the
Regular Trustees (or if there are more than two Regular Trustees by any two of
the Regular Trustees). Such signatures may be the manual or facsimile signatures
of the present or any future Regular Trustee. Typographical and other minor
errors or defects in any such reproduction of any such signature shall not
affect the validity of any Certificate. In case any Regular Trustee of the Trust
who shall have signed any of the Certificates shall cease to be such Regular
Trustee before the Certificate so signed shall be delivered by the Trust, such
Certificate nevertheless may be delivered as though the person who signed such
Certificate had not ceased to be such Regular Trustee; and any Certificate may
be signed on behalf of the Trust by such persons as, at the actual date of the
execution of such Certificate, shall be the Regular Trustees of the Trust,
although at the date of the execution and delivery of the Declaration any such
person was not such a Regular Trustee. Certificates shall be printed,
lithographed or engraved or may be produced in any other manner as is reasonably
acceptable to the Regular Trustees, as evidenced by their execution thereof, and
may have such letters, numbers or other marks of identification or designation
and such legends or endorsements as the Regular Trustees may deem appropriate,
or as may be required to comply with any law or with any rule or regulation made
pursuant thereto or with any rule or regulation of any stock exchange on which
Securities may be listed, or to conform to usage. Pending the preparation of
definitive Certificates, the Regular Trustees on behalf of the Trust may execute
temporary Certificates (printed, lithographed or typewritten), in substantially
the form of the definitive Certificates in lieu of which they are issued, but
with such omissions, insertions and variations as may be appropriate for
temporary Certificates, all as may be determined by the Regular Trustees. Each
temporary Certificate shall be executed by the Regular Trustees on behalf of the
Trust upon the same conditions and in substantially the same manner, and with
like effect, as definitive Certificates. Without unnecessary delay, the Regular
Trustees on behalf of the Trust will execute and furnish definitive Certificates
and thereupon any or all temporary Certificates may be surrendered to the
transfer agent and registrar in exchange therefor (without charge to the
Holders). Each Certificate whether in temporary or definitive form shall be
countersigned by the manual or facsimile signature of an authorized signatory of
the Person acting as registrar and transfer agent for the Securities, which
shall initially be the Property Trustee.
(d) The consideration received by the Trust for the issuance of the
Securities shall constitute a contribution to the capital of the Trust and shall
not constitute a loan to the Trust.
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(e) Upon issuance of the Securities as provided in this Declaration,
the Securities so issued shall be deemed to be validly issued, fully paid and
non-assessable.
(f) Every Person, by virtue of having become a Holder or a Preferred
Security Beneficial Owner in accordance with the terms of this Declaration,
shall be deemed to have expressly assented and agreed to the terms of, and shall
be bound by this Declaration.
(g) Upon issuance of the Securities as provided in this Declaration,
the Regular Trustees on behalf of the Trust shall return to AES the $10
constituting initial trust assets as set forth in the Original Declaration.
SECTION 7.02. Conversion Agent. The Trust shall maintain an office or
agency where Preferred Securities may be presented for conversion ("Conversion
Agent"). The Trust may appoint the Conversion Agent and may appoint one or more
additional Conversion Agents in such other locations as it may determine. The
term "Conversion Agent" includes any additional Conversion Agent. The Trust may
change any Conversion Agent without prior notice to any Holders. If the Trust
fails to appoint or maintain another entity as Conversion Agent, the Property
Trustee will act as such. The Trust or any of its Affiliates may act as
Conversion Agent. The Trust shall act as Conversion Agent for the Common
Securities. The Conversion Agent shall be entitled to the rights and protections
extended to the Property Trustee when acting in such capacity.
The Property Trustee is hereby initially appointed as Conversion Agent
for the Preferred Securities.
ARTICLE 8
TERMINATION OF TRUST
SECTION 8.01. Termination of Trust. This Declaration and the Trust
shall terminate and be of no further force or effect when:
(a) all of the Securities shall have been called for redemption and the
amounts necessary for redemption thereof shall have been paid to the Holders of
Securities in accordance with the terms of the Securities; or
(b) all of the Debentures shall have been distributed to the Holders of
Securities in exchange for all of the Securities in accordance with the terms of
the Securities; or
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(c) upon the expiration of the term of the Trust as set forth in
Section 3.16; or,
(d) upon the distribution of the Sponsor's common stock to all
Securities Holders upon conversion of all outstanding Preferred Securities,
and a certificate of cancellation is filed by the Trustees with the Secretary of
State of the State of Delaware. The Trustees shall so file such a certificate as
soon as practicable after the occurrence of an event referred to in this Section
8.01.
The provisions of Sections 3.12 and 4.02 and Article 10 shall survive
the termination of the Trust.
ARTICLE 9
TRANSFER OF INTERESTS
SECTION 9.01. Transfer of Securities. (a) Securities may only be
transferred, in whole or in part, in accordance with the terms and conditions
set forth in this Declaration. Any transfer or purported transfer of any
Security not made in accordance with this Declaration shall be null and void.
(b) Subject to this Article 9, Preferred Securities shall be freely
transferable.
(c) Subject to this Article 9, AES and any Related Party may only
transfer Common Securities to AES or a Related Party; provided that any such
transfer shall be subject to the condition that the transferor shall have
obtained (1) either a ruling from the Internal Revenue Service or an unqualified
written opinion addressed to the Trust and delivered to the Trustees of
nationally recognized independent tax counsel experienced in such matters to the
effect that such transfer will not (i) cause the Trust to be treated as issuing
a class of interests in the Trust differing from the class of interests
represented by the Common Securities originally issued to AES, (ii) result in
the Trust acquiring or disposing of, or being deemed to have acquired or
disposed of, an asset, or (iii) result in or cause the Trust to be treated as
anything other than a grantor trust for United States federal income tax
purposes and (2) an unqualified written opinion addressed to the Trust and
delivered to the Trustees of a nationally recognized independent counsel
experienced in such matters that such transfer will not cause the Trust to be an
Investment Company or controlled by an Investment Company.
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(d) Each Security that bears or is required to bear the legend set
forth in this Section 9.01(d) (a "Restricted Security") shall be subject to the
restrictions on transfer provided in the legend set forth in this Section
9.01(d), unless such restrictions on transfer shall be waived by the written
consent of the Regular Trustees, and the Holder of each Restricted Security, by
such securityholder's acceptance thereof, agrees to be bound by such
restrictions on transfer. As used in this Section 9.01(d), the term "transfer"
encompasses any sale, pledge, transfer or other disposition of any Restricted
Security.
Prior to the Transfer Restriction Termination Date, the 144A Global
Security, Temporary Regulation S Global Security, each Definitive Preferred
Security and any certificate evidencing Common Stock issued upon conversion
thereof shall bear a legend in substantially the following form, unless
otherwise agreed by the Regular Trustees (with written notice thereof to the
Indenture Trustee):
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY,
MAY NOT BE OFFERED OR SOLD EXCEPT AS SET FORTH IN THE FOLLOWING
SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS
THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT), (B) IT IS AN INSTITUTIONAL
"ACCREDITED INVESTOR" IN RULE 501(a)(1), (2), (3) OR (7) UNDER THE
SECURITIES ACT (AN "INSTITUTIONAL ACCREDITED INVESTOR")), OR (C)
IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN
OFFSHORE TRANSACTION, (2) AGREES THAT IT WILL NOT PRIOR TO THE
EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE
SECURITY EVIDENCED HEREBY UNDER RULE 144(k) UNDER THE SECURITIES
ACT (OR ANY SUCCESSOR PROVISION), RESELL OR OTHERWISE TRANSFER
THIS SECURITY EXCEPT (A) TO AES OR ANY SUBSIDIARY THEREOF, (B)
INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN
COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE
UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, BEFORE
SUCH TRANSFER
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FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON
TRANSFER OF THIS SECURITY (THE FORM OF WHICH LETTER CAN BE
OBTAINED FROM THE TRUSTEE) AND IF SUCH TRANSFER IS IN RESPECT OF
AN AGGREGATE PRINCIPAL AMOUNT OF SECURITIES LESS THAN $250,000, AN
OPINION OF COUNSEL ACCEPTABLE TO THE TRUST THAT SUCH TRANSFER IS
IN COMPLIANCE WITH THE SECURITIES ACT, (D) OUTSIDE THE UNITED
STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904
UNDER THE SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF
AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT AND (3) AGREES THAT IT WILL DELIVER TO
EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY
TRANSFER OF THIS SECURITY PRIOR TO THE EXPIRATION DATE OF THE
HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITY EVIDENCED
HEREBY UNDER RULE 144(k) UNDER THE SECURITIES ACT (OR ANY
SUCCESSOR PROVISION), THE TRANSFEROR MUST CHECK THE APPROPRIATE
BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH
TRANSFER AND SUBMIT THIS CERTIFICATE TO THE PROPERTY TRUSTEE. IF
THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR,
THE TRANSFEROR MUST, BEFORE SUCH TRANSFER, FURNISH TO THE ISSUER
SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS IT MAY
REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE
PURSUANT TO AN EXEMPTION FROM OR IN A TRANSACTION NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. AS USED
HEREIN, THE TERMS
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"OFFSHORE TRANSACTION", "UNITED STATES" AND "U.S. PERSON" HAVE THE
MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.
Following the Transfer Restriction Termination Date or the sale of a
Security or Common Stock for which a Security has been exchanged pursuant to an
effective registration statement or Rule 144, any Security or security issued in
exchange or substitution therefor (other than (i) Securities acquired by the
Sponsor or any Affiliate and (ii) Common Stock issued upon the conversion or
exchange of any Security described in clause (i) above) may upon surrender of
such Security for exchange to any Regular Trustee on behalf of the Trust in
accordance with the provisions of this Section 9.01(d), be exchanged for a new
Security or Securities, of like tenor and aggregate liquidation amount, which
shall not bear the restrictive legend required by this Section 9.01(d).
SECTION 9.02. Transfer of Certificates. The Regular Trustees shall
provide for the registration of Certificates and of transfers of Certificates,
which will be effected without charge but only upon payment (with such indemnity
as the Regular Trustees may require) in respect of any tax or other government
charges which may be imposed in relation to it. Upon surrender for registration
of transfer of any Certificate, the Regular Trustees shall cause one or more new
Certificates to be issued in the name of the designated transferee or
transferees. Every Certificate surrendered for registration of transfer shall be
accompanied by a written instrument of transfer in form satisfactory to the
Regular Trustees duly executed by the Holder or such Holder's attorney duly
authorized in writing. Each Certificate surrendered for registration of transfer
shall be canceled by the Regular Trustees. A transferee of a Certificate shall
be entitled to the rights and subject to the obligations of a Holder hereunder
upon the receipt by such transferee of a Certificate. By acceptance of a
Certificate, each transferee shall be deemed to have agreed to be bound by this
Declaration.
SECTION 9.03. Deemed Security Holders. The Trustees may treat the
Person in whose name any Certificate shall be registered on the books and
records of the Trust as the sole holder of such Certificate and of the
Securities represented by such Certificate for purposes of receiving
Distributions and for all other purposes whatsoever and, accordingly, shall not
be bound to recognize any equitable or other claim to or interest in such
Certificate or in the Securities represented by such Certificate on the part of
any Person, whether or not the Trustees shall have actual or other notice
thereof.
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SECTION 9.04. Book Entry Interests. (a) Except as provided in Section
9.07 and unless otherwise specified in the terms of the Preferred Securities,
the Preferred Securities Certificates, on original issuance (including Preferred
Securities, if any, issued on the Option Closing Date pursuant to the exercise
of the overallotment option set forth in the Purchase Agreement), will be issued
in the form of one or more, fully registered, global Preferred Security
Certificates (each a "Global Certificate"), to be delivered to DTC, the initial
Clearing Agency, by, or on behalf of, the Trust. Such Global Certificates shall
initially be registered on the books and records of the Trust in the name of
Cede & Co., the nominee of DTC, and no Preferred Security Beneficial Owner will
receive a definitive Preferred Security Certificate representing such Preferred
Security Beneficial Owner's interests in such Global Certificates, except as
provided in Section 9.07.
(b) Preferred Securities that upon initial issuance are beneficially
owned by QIBs may, at the option of the Trust, be represented by one or more
Global Certificates (a "144A Global Security"), and Preferred Securities that
upon initial issuance are beneficially owned by Non-U.S. Persons may, at the
option of the Trust, be represented by one or more Global Certificates (a
"Temporary Regulation S Global Security"). At any time on or after December 9,
1997 (the "Regulation S Securities Exchange Date"), one or more permanent Global
Certificates without the legend set forth in Section 9.01(d) (the "Permanent
Regulation S Global Security", and together with the Temporary Regulation S
Global Security, the "Regulation S Global Securities") shall be deposited with
the Clearing Agency, and the Property Trustee shall make endorsements reflecting
a decrease in the principal amount of the Temporary Regulation S Global Security
in an amount equal to the principal amount of the beneficial interest in the
Temporary Regulation S Global Security transferred. Transfers of interests in
the Preferred Securities between any 144A Global Security and any Regulation S
Global Security will be made in accordance with the standing instructions and
procedures of the Clearing Agency and its participants. The Property Trustee
shall make appropriate endorsements to reflect increases or decreases in the
amount of such Preferred Securities in global form to reflect any such
transfers.
Except as provided below, beneficial owners of a Preferred Security in
global form shall not be entitled to have certificates registered in their
names, will not receive or be entitled to receive physical delivery of
certificates in definitive form and will not be considered Holders of such
Preferred Security in global form.
Any transfer of a beneficial interest in a Preferred Security in global
form which cannot be effected through book-entry settlement must be effected by
the delivery to the transferee (or its nominee) of a Definitive Preferred
Security Certificate or Definitive Preferred Security Certificates registered in
the name of
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the transferee (or its nominee) on the books maintained by the Property Trustee.
With respect to any such transfer, the Property Trustee will cause, in
accordance with the standing instructions and procedures of the Clearing Agency,
the aggregate principal amount at maturity of the Preferred Security in global
form to be reduced and, following such reduction, the Sponsor will execute and
the Property Trustee will authenticate and make available for delivery to the
transferee (or such transferee's nominee, as the case may be), a Preferred
Security or Securities in the appropriate aggregate principal amount at maturity
in the name of such transferee (or its nominee) and bearing such restrictive
legends as may be required by this Declaration of Trust.
(c) So long as the Preferred Securities are eligible for book-entry
settlement and to the extent Preferred Securities held by QIBs or Non-U.S.
Persons, as the case may be, are held in a global form, or unless otherwise
required by law, upon any transfer of a Definitive Preferred Security to a QIB
in accordance with Rule 144A or to a Non-U.S. Person in accordance with
Regulation S, unless otherwise requested by the transferor, and upon receipt of
the Definitive Preferred Security Certificate being so transferred, together
with a certification from the transferor that the transfer is being made in
compliance with Rule 144A or Regulation S, as the case may be (or other evidence
satisfactory to the Property Trustee on behalf of the Trust), the Property
Trustee on behalf of the Trust shall make an endorsement on any 144A Global
Security or any Regulation S Global Security, as the case may be, to reflect an
increase in the number of Preferred Securities represented by such Global
Certificate, and the Property Trustee on behalf of the Trust shall cancel such
Definitive Preferred Security in accordance with the standing instructions and
procedures of the Clearing Agency, the number of Preferred Securities
represented by such Preferred Security in global form to be increased
accordingly; provided that no Definitive Preferred Security, or portion thereof,
in respect of which the Trust or an Affiliate of the Trust held any beneficial
interest shall be included in such Preferred Security in global form until such
Definitive Preferred Security is freely tradable in accordance with Rule 144(k);
provided further that the Trust shall issue Preferred Securities in definitive
form upon any transfer of a beneficial interest in the Preferred Security in
global form to the Sponsor or any Affiliate of the Sponsor.
(d) Any Global Certificate may be endorsed with or have incorporated in
the text thereof such legends or recitals or changes not inconsistent with the
provisions of this Declaration as may be required by the Clearing Agency, by any
national securities exchange or by the National Association of Securities
Dealers, Inc. in order for the Preferred Securities to be tradeable on the
PORTAL Market or as may be required for the Preferred Securities to be tradeable
on any other market developed for trading of securities pursuant to Rule 144A or
required to comply with any applicable law or any regulation thereunder or with
the rules and
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regulations of any securities exchange upon which the Preferred Securities may
be listed or traded or to conform with any usage with respect thereto, or to
indicate any special limitations or restrictions to which any particular
Preferred Securities are subject. Unless and until definitive, fully registered
Preferred Security Certificates (the "Definitive Preferred Security
Certificates") have been issued to the Preferred Security Beneficial Owners
pursuant to Section 9.07:
(i) the provisions of this Section 9.04 shall be in full force and
effect;
(ii) the Trust and the Trustees shall be entitled to deal with the
Clearing Agency for all purposes of this Declaration (including the
payment of Distributions on the Global Certificates and receiving
approvals, votes or consents hereunder) as the Holder of the Preferred
Securities and the sole holder of the Global Certificates and, except
as set forth herein or in Rule 3a-7 with respect to the Property
Trustee, shall have no obligation to the Preferred Security Beneficial
Owners; provided, that solely for the purposes of determining whether
the Holders of the requisite amount of Preferred Securities have voted
on any matter provided for in this Declaration, so long as definitive
Preferred Security Certificates have not been issued (pursuant to
Section 9.07 hereof), the Trustees may conclusively rely on, and shall
be protected in relying on, any written instrument (including a proxy)
delivered to the Trustees by the Clearing Agency setting forth the
Preferred Security Beneficial Owners' votes or assigning the right to
vote on any matter to any other Persons either in whole or in part;
(iii) to the extent that the provisions of this Section 9.04
conflict with any other provisions of this Declaration, the provisions
of this Section 9.04 shall control; and
(iv) the rights of the Preferred Security Beneficial Owners shall
be exercised only through the Clearing Agency and shall be limited to
those established by law and agreements between such Preferred Security
Beneficial Owners and the Clearing Agency and/or the Clearing Agency
Participants. DTC will make book entry transfers among the Clearing
Agency Participants and receive and transmit payments of Distributions
on the Global Certificates to such Clearing Agency Participants.
SECTION 9.05. Notices to Holders of Certificates. Whenever a notice or
other communication to the Holders is required to be given under this
Declaration, unless and until Definitive Preferred Security Certificates shall
have been issued pursuant to Section 9.07, the relevant Trustees shall give all
such notices and
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communications, specified herein to be given to Preferred Securities Holders, to
the Clearing Agency and, with respect to any Preferred Security Certificate
registered in the name of a Clearing Agency or the nominee of a Clearing Agency,
the Trustees shall, except as set forth herein or in Rule 3a-7 with respect to
the Property Trustee, have no notice obligations to the Preferred Security
Beneficial Owners.
SECTION 9.06. Appointment of Successor Clearing Agency. If any Clearing
Agency elects to discontinue its services as securities depository with respect
to the Preferred Securities, the Regular Trustees may, in their sole discretion,
appoint a successor Clearing Agency with respect to the Preferred Securities.
SECTION 9.07. Definitive Preferred Securities Certificates. (a) If (i)
a Clearing Agency elects to discontinue its services as securities depository
with respect to the Preferred Securities and a successor Clearing Agency is not
appointed within 90 days after such discontinuance pursuant to Section 9.06 or
(ii) the Regular Trustees elect after consultation with the Sponsor to terminate
the book entry system through the Clearing Agency with respect to the Preferred
Securities, then (x) Definitive Preferred Security Certificates shall be
prepared by the Regular Trustees on behalf of the Trust with respect to such
Preferred Securities and (y) upon surrender of the Global Certificates by the
Clearing Agency, accompanied by registration instructions, the Regular Trustees
shall cause definitive Preferred Security Certificates to be delivered to
Preferred Security Beneficial Owners in accordance with the instructions of the
Clearing Agency. Neither the Trustees nor the Trust shall be liable for any
delay indelivery of such instructions and each of them may conclusively rely on
and shall be protected in relying on, such instructions.
(b) Restricted Securities that upon initial issuance are beneficially
owned by, or are subsequently transferred to, Institutional Accredited Investors
that are neither QIBs nor Non-U.S. Persons will be issued as Definitive
Preferred Security Certificates and may not be represented by a Global
Certificate. Preferred Securities that upon initial issuance are beneficially
owned by Persons that are Non-U.S. Persons may, at the option of the Trust, be
issued as Definitive Preferred Security Certificates. Definitive Preferred
Security Certificates issued in exchange for all or a part of a Preferred
Security in global form shall be registered in such names and in such authorized
denominations as the Clearing Agency, pursuant to instructions from its direct
or indirect participants or otherwise, shall instruct the Property Trustee. Upon
execution and authentication, the Property Trustee shall make available for
delivery such Definitive Preferred Security Certificates to the person in whose
name such Definitive Preferred Security Certificates are so registered. In the
case of transfers to Institutional
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Accredited Investors, the Property Trustee shall make appropriate endorsements
to reflect decreases in the amount of the applicable Global Certificate.
SECTION 9.08. Mutilated, Destroyed, Lost or Stolen Certificates. If (a)
any mutilated Certificates should be surrendered to the Regular Trustees, or if
the Regular Trustees shall receive evidence to their satisfaction of the
destruction, loss or theft of any Certificate; and (b) there shall be delivered
to the Regular Trustees such security or indemnity as may be required by them to
keep each of them harmless, then in the absence of notice that such Certificate
shall have been acquired by a bona fide purchaser, any two Regular Trustees on
behalf of the Trust shall execute and deliver, in exchange for or in lieu of any
such mutilated, destroyed, lost or stolen Certificate, a new Certificate of like
denomination. In connection with the issuance of any new Certificate under this
Section 9.08, the Regular Trustees may require the payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
therewith. Any duplicate Certificate issued pursuant to this section shall
constitute conclusive evidence of an ownership interest in the relevant
Securities, as if originally issued, whether or not the lost, stolen or
destroyed Certificate shall be found at any time.
ARTICLE 10
LIMITATION OF LIABILITY; INDEMNIFICATION
SECTION 10.01. Exculpation. (a) No Indemnified Person shall be liable,
responsible or accountable in damages or otherwise to the Trust or any Covered
Person for any loss, damage or claim incurred by reason of any act or omission
performed or omitted by such Indemnified Person in good faith on behalf of the
Trust and in a manner such Indemnified Person reasonably believed to be within
the scope of the authority conferred on such Indemnified Person by this
Declaration or by law, except that an Indemnified Person shall be liable for any
such loss, damage or claim incurred by reason of such Indemnified Person's gross
negligence (but, in the case of the Property Trustee, subject to the Trust
Indenture Act) or willful misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in good
faith upon the records of the Trust and upon such information, opinions, reports
or statements presented to the Trust by any Person as to matters the Indemnified
Person reasonably believes are within such other Person's professional or expert
competence and who has been selected with reasonable care by or on behalf of the
Trust, including information, opinions, reports or statements as to the value
and amount of the assets, liabilities, profits, losses or any other facts
pertinent to the
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existence and amount of assets from which Distributions to Holders of Securities
might properly be paid.
(c) Pursuant to ss. 3803(a) of the Business Trust Act, the Holders of
Securities, in their capacities as Holders, shall be entitled to the same
limitation of liability that is extended to stockholders of private corporations
for profit organized under the General Corporation Law of the State of Delaware.
SECTION 10.02. Indemnification. (a) To the fullest extent permitted by
applicable law, the Sponsor shall indemnify and hold harmless each Indemnified
Person from and against any loss, damage or claim incurred by such Indemnified
Person by reason of any act or omission performed or omitted by such Indemnified
Person in good faith on behalf of the Trust and in a manner such Indemnified
Person reasonably believed to be within the scope of authority conferred on such
Indemnified Person by this Declaration, except that no Indemnified Person shall
be entitled to be indemnified in respect of any loss, damage or claim incurred
by such Indemnified Person by reason of gross negligence (but, in the case of
the Property Trustee, subject to the Trust Indenture Act) or willful misconduct
with respect to such acts or omissions.
(b) To the fullest extent permitted by applicable law, expenses
(including legal fees) incurred by an Indemnified Person in defending any claim,
demand, action, suit or proceeding shall, from time to time, be advanced by the
Sponsor prior to the final disposition of such claim, demand, action, suit or
proceeding upon receipt by the Sponsor of an undertaking by or on behalf of the
Indemnified Person to repay such amount if it shall be determined that the
Indemnified Person is not entitled to be indemnified as authorized in Section
10.02(a).
(c) The provisions of this Section 10.02 shall survive the termination
of this Declaration or the resignation or removal of any Trustee.
SECTION 10.03. Outside Business. The Sponsor and any Trustee may engage
in or possess an interest in other business ventures of any nature or
description, independently or with others, similar or dissimilar to the business
of the Trust, and the Trust and the Holders of Securities shall have no rights
by virtue of this Declaration in and to such independent ventures or the income
or profits derived therefrom, and the pursuit of any such venture, even if
competitive with the business of the Trust, shall not be deemed wrongful or
improper. Neither the Sponsor nor any Trustee shall be obligated to present any
particular investment or other opportunity to the Trust even if such opportunity
is of a character that, if presented to the Trust, could be taken by the Trust,
and the Sponsor or any Trustee shall have the right to take for its own account
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(individually or as a partner or fiduciary) or to recommend to others any such
particular investment or other opportunity. Any Trustee may engage or be
interested in any financial or other transaction with the Sponsor or any
Affiliate of the Sponsor or may act as depository for, trustee or agent for, or
act on any committee or body of holders of, securities or other obligations of
the Sponsor or its Affiliates.
ARTICLE 11
ACCOUNTING
SECTION 11.01. Fiscal Year. The fiscal year ("Fiscal Year") of the
Trust shall be the calendar year, or such other year as is required by the Code.
SECTION 11.02. Certain Accounting Matters. (a) At all times during the
existence of the Trust, the Regular Trustees shall keep, or cause to be kept,
full books of account, records and supporting documents, which shall reflect in
reasonable detail, each transaction of the Trust. The books of account shall be
maintained on the accrual method of accounting, in accordance with generally
accepted accounting principles, consistently applied. The Trust shall use the
accrual method of accounting for United States federal income tax purposes. The
books and records of the Trust, together with a copy of this Declaration and a
certified copy of the Certificate of Trust, or any amendment thereto, shall at
all times be maintained at the principal office of the Trust and shall be open
for inspection for any examination by any Holder or its duly authorized
representative for any purpose reasonably related to its interest in the Trust
during normal business hours.
(b) The Regular Trustees shall cause to be prepared and mailed to each
Holder of Securities, an annual United States federal income tax information
statement, on such form as is required by the Code, containing such information
with regard to the Securities held by each Holder as is required by the Code and
the Treasury Regulations. Notwithstanding any right under the Code to deliver
any such statement at a later date, the Regular Trustees shall endeavor to
deliver all such statements within 30 days after the end of each Fiscal Year of
the Trust.
(c) The Regular Trustees shall cause to be prepared and filed with the
appropriate taxing authority, an annual United States federal income tax return,
on such form as is required by the Code, and any other annual income tax returns
required to be filed by the Regular Trustees on behalf of the Trust with any
state or local taxing authority, such returns to be filed as soon as practicable
after the end of each Fiscal Year of the Trust.
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SECTION 11.03. Banking. The Trust shall maintain one or more bank
accounts in the name and for the sole benefit of the Trust; provided, however,
that all payments of funds in respect of the Debentures held by the Property
Trustee shall be made directly to the Property Account and no other funds from
the Trust shall be deposited in the Property Account. The sole signatories for
such accounts shall be designated by the Regular Trustees; provided, however,
that the Property Trustee shall designate the sole signatories for the Property
Account.
SECTION 11.04. Withholding. The Trust and the Trustees shall comply
with all withholding requirements under United States federal, state and local
law. The Trust shall request, and the Holders shall provide to the Trust, such
forms or certificates as are necessary to establish an exemption from
withholding with respect to each Holder, and any representations and forms as
shall reasonably be requested by the Trust to assist it in determining the
extent of, and in fulfilling, its withholding obligations. The Trust shall file
required forms with applicable jurisdictions and, unless an exemption from
withholding is properly established by a Holder, shall remit amounts withheld
with respect to the Holder to applicable jurisdictions. To the extent that the
Trust is required to withhold and pay over any amounts to any authority with
respect to distributions or allocations to any Holder, the amount withheld shall
be deemed to be a distribution in the amount of the withholding to the Holder.
In the event of any claimed overwithholding, Holders shall be limited to an
action against the applicable jurisdiction. If the amount to be withheld was not
withheld from a Distribution, the Trust may reduce subsequent Distributions by
the amount of such withholding.
ARTICLE 12
AMENDMENTS AND MEETINGS
SECTION 12.01. Amendments. (a) Except as otherwise provided in this
Declaration or by any applicable terms of the Securities, this Declaration may
be amended by, and only by, a written instrument executed by a majority of the
Regular Trustees; provided, however, that (i) no amendment to this Declaration
shall be made unless the Regular Trustees shall have obtained (A) either a
ruling from the Internal Revenue Service or a written unqualified opinion of
nationally recognized independent tax counsel experienced in such matters
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to the effect that such amendment will not cause the Trust to be classified for
United States federal income tax purposes as an association taxable as a
corporation or a partnership and to the effect that the Trust will continue to
be treated as a grantor trust for purposes of United States federal income
taxation and (B) a written unqualified opinion of nationally recognized
independent counsel experienced in such matters to the effect that such
amendment will not cause the Trust to be an Investment Company which is required
to be registered under the Investment Company Act, (ii) at such time after the
Trust has issued any Securities which remain outstanding, any amendment which
would adversely affect the rights, privileges or preferences of any Holder of
Securities may be effected only with such additional requirements as may be set
forth in the terms of such Securities, (iii) Section 4.02, Section 9.01(c) and
this Section 12.01 shall not be amended without the consent of all of the
Holders of the Securities, (iv) no amendment which adversely affects the rights,
powers and privileges of the Property Trustee shall be made without the consent
of the Property Trustee, (v) Article 4 shall not be amended without the consent
of the Sponsor, and (vi) the rights of Holders of Common Securities under
Article 5 to increase or decrease the number of, and to appoint, replace or
remove, Trustees shall not be amended without the consent of each Holder of
Common Securities.
(b) Notwithstanding Section 12.02(a)(ii), this Declaration may be
amended without the consent of the Holders of the Securities to (i) cure any
ambiguity, (ii) correct or supplement any provision in this Declaration that may
be defective or inconsistent with any other provision of this Declaration, (iii)
to add to the covenants, restrictions or obligations of the Sponsor, and (iv) to
conform to any changes in Rule 3a-7 or any change in interpretation or
application of Rule 3a-7 by the Commission, which amendment does not adversely
affect the rights, preferences or privileges of the Holders.
SECTION 12.02. Meetings of the Holders of Securities; Action by Written
Consent. (a) Meetings of the Holders of Preferred Securities and/or Common
Securities may be called at any time by the Regular Trustees (or as provided in
the terms of the Securities) to consider and act on any matter on which Holders
of such class of Securities are entitled to act under the terms of this
Declaration, the terms of the Securities or the rules of any stock exchange on
which the Preferred Securities are listed or admitted for trading. The Regular
Trustees shall call a meeting of Holders of Preferred Securities or Common
Securities, if directed to do so by Holders of at least 10% in liquidation
amount of such class of Securities. Such direction shall be given by delivering
to the Regular Trustees one or more calls in a writing stating that the signing
Holders of Securities wish to call a meeting and indicating the general or
specific purpose for which the meeting is to be called. Any Holders of
Securities calling a meeting shall specify in writing the Certificates held by
the Holders of Securities exercising the right to call a meeting and only those
specified Certificates shall be counted for purposes of determining whether the
required percentage set forth in the second sentence of this paragraph has been
met.
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(b) Except to the extent otherwise provided in the terms of the
Securities, the following provision shall apply to meetings of Holders of
Securities:
(i) Notice of any such meeting shall be given by mail to all the
Holders of Securities having a right to vote thereat not less than 7
days nor more than 60 days prior to the date of such meeting. Whenever
a vote, consent or approval of the Holders of Securities is permitted
or required under this Declaration or the rules of any stock exchange
on which the Preferred Securities are listed or admitted for trading,
such vote, consent or approval may be given at a meeting of the Holders
of Securities. Any action that may be taken at a meeting of the Holders
of Securities may be taken without a meeting if a consent in writing
setting forth the action so taken is signed by Holders of Securities
owning not less than the minimum aggregate liquidation amount of
Securities that would be necessary to authorize or take such action at
a meeting at which all Holders of Securities having a right to vote
thereon were present and voting. Prompt notice of the taking of action
without a meeting shall be given to the Holders of Securities entitled
to vote who have not consented in writing. The Regular Trustees may
specify that any written ballot submitted to the Holders of Securities
for the purpose of taking any action without a meeting shall be
returned to the Trust within the time specified by the Regular
Trustees.
(ii) Each Holder of a Security may authorize any Person to act for
it by proxy on all matters in which a Holder of a Security is entitled
to participate, including waiving notice of any meeting, or voting or
participating at a meeting. No proxy shall be valid after the
expiration of 11 months from the date thereof unless otherwise provided
in the proxy. Every proxy shall be revocable at the pleasure of the
Holder of the Security executing it. Except as otherwise provided
herein or in the terms of the Securities, all matters relating to the
giving, voting or validity of proxies shall be governed by the General
Corporation Law of the State of Delaware relating to proxies, and
judicial interpretations thereunder, as if the Trust were a Delaware
corporation and the Holders of the Securities were stockholders of a
Delaware corporation.
(iii) Each meeting of the Holders of the Securities shall be
conducted by the Regular Trustees or by such other Person that the
Regular Trustees may designate.
(iv) Unless otherwise provided in the Business Trust Act, this
Declaration or the rules of any stock exchange on which the Preferred
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Securities are then listed or admitted for trading, the Regular
Trustees, in their sole discretion, shall establish all other
provisions relating to meetings of Holders of Securities, including
notice of the time, place or purpose of any meeting at which any matter
is to be voted on by any Holders of Securities, waiver of any such
notice, action by consent without a meeting, the establishment of a
record date, quorum requirements, voting in person or by proxy or any
other matter with respect to the exercise of any such right to vote.
ARTICLE 13
REPRESENTATIONS OF PROPERTY TRUSTEE AND DELAWARE TRUSTEE
SECTION 13.01. Representations and Warranties of Property Trustee. (a)
The Trustee which acts as initial Property Trustee represents and warrants to
the Trust and to the Sponsor at the date of this Declaration, and each Successor
Property Trustee represents and warrants to the Trust and the Sponsor at the
time of the Successor Property Trustee's acceptance of its appointment as
Property Trustee that:
(i) The Property Trustee is a national banking association or a
banking corporation with trust powers, duly organized, validly existing
and in good standing under the laws of the United States or the laws of
the state of its incorporation, with trust power and authority to
execute and deliver, and to carry out and perform its obligations under
the terms of, this Declaration.
(ii) The execution, delivery and performance by the Property
Trustee of this Declaration has been duly authorized by all necessary
corporate action on the part of the Property Trustee. The Declaration
has been duly executed and delivered by the Property Trustee, and
constitutes a legal, valid and binding obligation of the Property
Trustee, enforceable against it in accordance with its terms, subject
to applicable bankruptcy, reorganization, moratorium, insolvency, and
other similar laws affecting creditors' rights generally and to general
principles of equity and the discretion of the court (regardless of
whether the enforcement of such remedies is considered in a proceeding
in equity or at law).
(iii) The execution, delivery and performance of this Declaration
by the Property Trustee does not conflict with or constitute a breach
of the Charter or By-laws of the Property Trustee.
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(iv) No consent, approval or authorization of, or registration
with or notice to, any banking authority which supervises or regulates
the Property Trustee is required for the execution, delivery or
performance by the Property Trustee, of this Declaration.
(v) The Property Trustee satisfies the qualifications set forth in
Section 5.01(c).
(b) The Trustee which acts as initial Delaware Trustee represents and
warrants to the Trust and the Sponsor at the date of this Declaration, and each
Successor Delaware Trustee represents and warrants to the Trust and the Sponsor
at the time of the Successor Delaware Trustee's acceptance of its appointment as
Delaware Trustee, that it satisfies the qualifications set forth in Section
5.01(a)(3).
ARTICLE 14
MISCELLANEOUS
SECTION 14.01. Notices. All notices provided for in this Declaration
shall be in writing, duly signed by the party giving such notice, and shall be
delivered, telecopied or mailed by first class mail, as follows:
(a) if given to the Trust, in care of the Regular Trustees at the
Trust's mailing address set forth below (or such other address as the Regular
Trustees on behalf of the Trust may give notice of to the Holders of the
Securities):
AES Trust II
c/o The AES Corporation
1001 North 19th Street
Arlington, Virginia 22209
Attention: General Counsel
Facsimile No: (703) 528-4510
(b) if given to the Property Trustee, at the mailing address of the
Property Trustee set forth below (or such other address as the Property Trustee
may give notice of to the Holders of the Securities):
The First National Bank of Chicago
One First National Plaza, Suite 0126
Chicago, IL 60670-0126
Attention: Corporate Trust Administrator
Telecopy: (312) 407-1708
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(c) if given to the Delaware Trustee, at the mailing address of the
Delaware Trustee set forth below (or such other address as the Delaware Trustee
may give notice of to the Holders of the Securities):
First Chicago Delaware Inc.
300 King Street
Wilmington, Delaware 19801
Telecopy: (312) 407-1708
(d) if given to the Holder of the Common Securities, at the mailing
address of the Sponsor set forth below (or such other address as the Holder of
the Common Securities may give notice to the Trust):
The AES Corporation
1001 North 19th Street
Arlington, Virginia 22209
Attention: Corporate Secretary
Facsimile No: (703) 528-4510
(e) if given to any other Holder, at the address set forth on the books
and records of the Trust.
A copy of any notice to the Property Trustee or the Delaware Trustee
shall also be sent to the Trust. All notices shall be deemed to have been given,
when received in person, telecopied with receipt confirmed, or mailed by first
class mail, postage prepaid except that if a notice or other document is refused
delivery or cannot be delivered because of a changed address of which no notice
was given, such notice or other document shall be deemed to have been delivered
on the date of such refusal or inability to deliver.
SECTION 14.02. Undertaking for Costs. All parties to this Declaration
agree, and each Holder of any Securities by his or her acceptance thereof shall
be deemed to have agreed, that any court may in its discretion require, in any
suit for the enforcement of any right or remedy under this Declaration, or in
any suit against the Property Trustee for any action taken or omitted by it as
Property Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section 14.02 shall not apply to any suit instituted by the
Property Trustee, to any suit instituted by any Holder of Preferred Securities,
or group of Holders of Preferred Securities, holding more than 10% in aggregate
liquidation amount of the outstanding Preferred Securities, or to any suit
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instituted by any Holder of Preferred Securities for the enforcement of the
payment of the principal of (or premium, if any) or interest on the Debentures,
on or after the respective due dates expressed in such Debentures.
SECTION 14.03. Governing Law. This Declaration and the rights of the
parties hereunder shall be governed by and interpreted in accordance with the
laws of the State of Delaware and all rights and remedies shall be governed by
such laws without regard to principles of conflict of laws.
SECTION 14.04. Headings. Headings contained in this Declaration are
inserted for convenience of reference only and do not affect the interpretation
of this Declaration or any provision hereof.
SECTION 14.05. Partial Enforceability. If any provision of this
Declaration, or the application of such provision to any Person or circumstance,
shall be held invalid, the remainder of this Declaration, or the application of
such provision to persons or circumstances other than those to which it is held
invalid, shall not be affected thereby.
SECTION 14.06. Counterparts. This Declaration may contain more than one
counterpart of the signature pages and this Declaration may be executed by the
affixing of the signature of the Sponsor and each of the Trustees to one of such
counterpart signature pages. All of such counterpart signature pages shall be
read as though one, and they shall have the same force and effect as though all
of the signers had signed a single signature page.
SECTION 14.07. Intention of the Parties. It is the intention of the
parties hereto that the Trust not be classified for United States federal income
tax purposes as an association taxable as a corporation or partnership but that
the Trust be treated as a grantor trust for United States federal income tax
purposes. The provisions of this Declaration shall be interpreted to further
this intention of the parties.
SECTION 14.08. Successors and Assigns. Whenever in this Declaration any
of the parties hereto is named or referred to, the successors and assigns of
such party shall be deemed to be included, and all covenants and agreements in
this Declaration by the Sponsor and the Trustees shall bind and inure to the
benefit of their respective successors and assigns, whether so expressed.
IN WITNESS WHEREOF, the undersigned has caused these presents to be
executed as of the day and year first above written.
THE AES Corporation
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as Sponsor
By: /s/ Dennis W. Bakke
-----------------------------------------
Name: Dennis W. Bakke
Title: President and Chief Executive Officer
/s/ William R. Luraschi
--------------------------------------------
William R. Luraschi
as Trustee
/s/ Willard Hoagland
--------------------------------------------
Willard Hoagland
as Trustee
/s/ Barry J. Sharp
--------------------------------------------
Barry J. Sharp
as Trustee
The First National Bank of Chicago
as Property Trustee
By: /s/ Richard Manella
-------------------------------------------
Name: Richard Manella
Title: Vice President
First Chicago Delaware Inc.
as Delaware Trustee
By: /s/ Richard Manella
-------------------------------------------
Name: Richard Manella
Title: Vice President
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EXHIBIT A
RESTATED CERTIFICATE OF TRUST
OF
AES TRUST II
THIS Restated Certificate of Trust of AES Capital Trust II (the
"Trust"), dated March 27, 1997, is being duly executed and filed by the
undersigned, as trustees, to form a business trust under the Delaware Business
Trust Act (12 Del. Code ss. 3801 et seq.).
WHEREAS, the Trustees entered into a Certificate of Trust dated as of
November 1, 1996 (the "Original Certificate") in order to form a business trust
under the Delaware Business Trust Act (12 Del. Code ss. 3801 et seq.).
NOW, THERETOFORE, it is the intention of the parties hereto that the
Original Certificate of Trust be amended and restated in its entirety as
provided herein.
1. Name. The name of the business trust being formed hereby is AES
Trust II.
2. Delaware Trustee. The name and business address of the trustee of
the Trust with a principal place of business in the State of Delaware is First
Chicago Delaware Inc., 300 King Street, Wilmington, Delaware 19801.
3. Effective Date. This Certificate of Trust shall be effective as of
its filing.
IN WITNESS WHEREOF, the undersigned, being the sole trustees of the
Trust, have executed this Certificate of Trust as of the date first above
written.
First Chicago Delaware Inc.
as Delaware Trustee
/s/ Steven M. Wagner
----------------------------------------
Name: Steven M. Wagner
Title: Vice President
<PAGE>
The First National Bank of Chicago
as Property Trustee
/s/ Richard D. Manella
----------------------------------------
Name: Richard D. Manella
Title: Vice President
/s/ William R. Luraschi
----------------------------------------
William R. Luraschi
as Trustee
/s/ Willard Hoagland
----------------------------------------
Willard Hoagland
as Trustee
/s/ Barry J. Sharp
----------------------------------------
Barry J. Sharp
as Trustee
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EXHIBIT B
TERMS OF
PREFERRED SECURITIES
Pursuant to Section 7.01 of the Amended and Restated Declaration of
Trust of AES Trust II dated as of October 29, 1997 (as amended from time to
time, the "Declaration"), the designations, rights, privileges, restrictions,
preferences and other terms and provisions of the Preferred Securities are set
forth below (each capitalized term used but not defined herein having the
meaning set forth in the Declaration):
1. DESIGNATION AND NUMBER. Preferred Securities of the Trust with an
aggregate liquidation amount in the assets of the Trust of Three Hundred Million
Dollars ($300,000,000) (plus up to an additional Forty-Five Million Dollars
($45,000,000) issuable upon exercise of the overallotment option set forth in
the Purchase Agreement) and a liquidation amount in the assets of the Trust of
$50 per Preferred Security, are hereby designated as "$2.75 Term Convertible
Securities, Series B". The Preferred Security Certificates evidencing the
Preferred Securities shall be substantially in the form attached hereto as Annex
I, with such changes and additions thereto or deletions therefrom as may be
required by ordinary usage, custom or practice or to conform to the rules of any
stock exchange on which the Preferred Securities are listed. In connection with
the issuance and sale of the Preferred Securities and the Common Securities, the
Trust will purchase as trust assets Debentures of AES having an aggregate
principal amount equal to the aggregate liquidation amount of the Preferred
Securities and Common Securities so issued and bearing interest at an annual
rate equal to the annual Distribution rate on the Preferred Securities and
Common Securities and having payment and redemption provisions which correspond
to the payment and redemption provisions of the Preferred Securities and Common
Securities.
2. DISTRIBUTIONS. (a) Distributions payable on each Preferred Security
will be fixed at a rate per annum of $2.75 (the "Coupon Rate") subject to
increase in certain limited circumstances pursuant to the Registration Rights
Agreement per Preferred Security. Distributions in arrears for more than one
calendar quarter will bear interest at the rate per annum of 5.50% thereof (to
the extent permitted by law), compounded quarterly. The term "Distributions" as
used herein means such periodic cash distributions and any such interest payable
unless otherwise stated. A Distribution will be made by the Property Trustee
only to the extent that interest payments are made in respect of the Debentures
held by the Property Trustee. The amount of Distributions payable for any period
will be computed for any quarterly Distribution period on the basis of a 360-day
year of twelve 30-day months.
<PAGE>
(b) Distributions on the Preferred Securities will be cumulative, will
accrue from October 29, 1997 and will be payable quarterly in arrears, on the
last day of each quarter commencing on December 31, 1997, except as otherwise
described below, but only if and to the extent that interest payments are made
in respect of the Debentures held by the Property Trustee. So long as AES shall
not be in default in the payment of interest on the Debentures, AES has the
right under the Indenture for the Debentures to defer payments of interest by
extending the interest payment period from time to time on the Debentures for a
period not exceeding 20 consecutive quarterly interest periods (each, an
"Extension Period") and, as a consequence, quarterly Distributions will continue
to accrue with interest thereon (to the extent permitted by applicable law) at
the rate of 5.50% per annum, compounded quarterly during any such Extension
Period. Prior to the termination of any such Extension Period, AES may further
extend such Extension Period; provided that such Extension Period together with
all such previous and further extensions thereof may not exceed 20 consecutive
quarterly interest periods; and provided that no Extension Period shall last
beyond the date of maturity or any redemption date of the Debentures.. Upon the
termination of any Extension Period and the payment of all amounts then due, AES
may commence a new Extension Period, subject to the above requirements. Payments
of accrued Distributions will be payable to Holders of Preferred Securities as
they appear on the books and records of the Trust on the first record date after
the end of the Extension Period.
(c) Distributions on the Preferred Securities will be payable promptly
by the Property Trustee (or other Paying Agent) upon receipt of immediately
available funds to the Holders thereof as they appear on the books and records
of the Trust on the relevant record dates. While the Preferred Securities remain
in book-entry only form, the relevant record dates shall be one business day
prior to the relevant Distribution date, and if the Preferred Securities are no
longer in book-entry only form, the Regular Trustees shall have the right to
select relevant record dates which shall be more than one business day prior to
the relevant payment dates. Distributions payable on any Preferred Securities
that are not punctually paid on any Distribution payment date as a result of AES
having failed to make the corresponding interest payment on the Debentures will
forthwith cease to be payable to the person in whose name such Preferred
Security is registered on the relevant record date, and such defaulted
Distribution will instead be payable to the person in whose name such Preferred
Security is registered on the special record date established by the Regular
Trustees, which record date shall correspond to the special record date or other
specified date determined in accordance with the Indenture; provided, however,
that Distributions shall not be considered payable on any Distribution payment
date falling within an Extension Period unless AES has elected to make a full or
partial payment of interest accrued on the Debentures on such Distribution
payment date. Subject to any applicable laws and regulations and the provisions
of the Declaration, each payment in respect of the Preferred Securities will be
made as described in paragraph 10
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hereof. If any date on which Distributions are payable on the Preferred
Securities is not a Business Day, then payment of the Distribution payable on
such date will be made on the next succeeding day that is a Business Day (and
without any interest or other payment in respect of any such delay) except that,
if such Business Day is in the next succeeding calendar year, such payment shall
be made on the immediately preceding Business Day, in each case with the same
force and effect as if made on such date.
(d) All Distributions paid with respect to the Preferred Securities and
the Common Securities will be paid Pro Rata to the Holders thereof entitled
thereto. If an Event of Default has occurred and is continuing, the Preferred
Securities shall have a priority over the Common Securities with respect to
Distributions.
(e) In the event of an election by the Holder to convert its Securities
through the Conversion Agent into Common Stock pursuant to the terms of the
Securities as set forth in this Exhibit B to the Declaration, no payment,
allowance or adjustment shall be made with respect to accumulated and unpaid
Distributions on such Securities, or be required to be made; provided, however,
that if a Security is surrendered for conversion after the close of business on
any regular record date for payment of a Distribution and before the opening of
business on the corresponding Distribution date, then, notwithstanding such
conversion, the Distribution payable on such Distribution date will be paid in
cash to the person in whose name the Security is registered at the close of
business on such record date, and (other than a Security or a portion of a
Security called for redemption on a redemption date occurring after such record
date and on or prior to such Distribution date) when so surrendered for
conversion, the Security must be accompanied by payment of an amount equal to
the Distribution payable on such Distribution date.
(f) In the event that there is any money or other property held by or
for the Trust that is not accounted for under the Declaration, such money or
property shall be distributed Pro Rata among the Holders of the Preferred
Securities and Common Securities.
3. LIQUIDATION DISTRIBUTION UPON DISSOLUTION. In the event of any
voluntary or involuntary dissolution, winding-up or termination of the Trust,
the Holders of the Preferred Securities and Common Securities at the date of the
dissolution, winding-up or termination, as the case may be, will be entitled to
receive Pro Rata solely out of the assets of the Trust available for
distribution to Holders of Preferred Securities and Common Securities after
satisfaction of liabilities to creditors, an amount equal to the aggregate of
the stated liquidation amount of $50 per Preferred Security and Common Security
plus accrued and unpaid Distributions thereon to the date of payment (such
amount being the "Liquidation Distribution"), unless, in connection with such
dissolution, winding-up or termination, and after
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satisfaction of liabilities to creditors, Debentures in an aggregate principal
amount equal to the aggregate stated liquidation amount of such Preferred
Securities and Common Securities and bearing accrued and unpaid interest in an
amount equal to the accrued and unpaid Distributions on, such Preferred
Securities and Common Securities, shall be distributed Pro Rata to the Holders
of the Preferred Securities and Common Securities in exchange for such
Securities.
If, upon any such dissolution, the Liquidation Distribution can be paid
only in part because the Trust has insufficient assets available to pay in full
the aggregate Liquidation Distribution, then the amounts payable directly by the
Trust on the Preferred Securities and Common Securities shall be paid, subject
to the next paragraph, on a Pro Rata basis.
Holders of Common Securities will be entitled to receive Liquidation
Distributions upon any such dissolution Pro Rata with Holders of Preferred
Securities, except that if an Event of Default has occurred and is continuing,
the Preferred Securities shall have a priority over the Common Securities with
respect to such Liquidation Distribution.
4. REDEMPTION AND DISTRIBUTION OF DEBENTURES. The Preferred Securities
and Common Securities may only be redeemed if Debentures having an aggregate
principal amount equal to the aggregate liquidation amount of the Preferred
Securities and Common Securities are repaid, redeemed or distributed as set
forth below:
(a) Upon the repayment of the Debentures, in whole or in part, whether
at maturity, upon redemption at any time or from time to time on or after
September 30, 2000, or at any time in certain circumstances upon the occurrence
of a Tax Event, the proceeds of such repayment will be promptly applied to
redeem Pro Rata Preferred Securities and Common Securities having an aggregate
liquidation amount equal to the aggregate principal amount of the Debentures so
repaid or redeemed, upon not less than 30 nor more than 60 days' notice, at a
redemption price per Preferred and Common Security equal to the redemption price
of the Debentures, together with accrued and unpaid Distributions thereon
through the date of redemption, payable in cash (the "Redemption Price"). The
date of any such repayment or redemption of Preferred Securities and Common
Securities shall be established to coincide with the repayment or redemption
date of the Debentures.
(b) If fewer than all the outstanding Preferred Securities and Common
Securities are to be so redeemed, the Preferred Securities and the Common
Securities will be redeemed Pro Rata and the Preferred Securities to be redeemed
will be redeemed as described in paragraph 4(f)(ii) below. If a partial
redemption would result in the delisting of the Preferred Securities by any
national securities exchange or other organization on which the Preferred
Securities are then listed, AES pursuant
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to the Indenture will only redeem Debentures in whole and, as a result, the
Trust may only redeem the Preferred Securities in whole.
(c) If, at any time, a Tax Event or an Investment Company Event (each
as hereinafter defined, and each a "Special Event") shall occur and be
continuing, the Regular Trustees shall, unless the Debentures are redeemed in
the limited circumstances described below, dissolve the Trust and, after
satisfaction of creditors, cause Debentures held by the Property Trustee having
an aggregate principal amount equal to the aggregate stated liquidation amount
of and accrued and unpaid interest equal to accrued and unpaid Distributions on,
and having the same record date for payment as the Preferred Securities and
Common Securities, to be distributed to the Holders of the Preferred Securities
and Common Securities on a Pro Rata basis in liquidation of such Holders'
interests in the Trust, within 90 days following the occurrence of such Special
Event (the "90 Day Period"), provided, however, that in the case of the
occurrence of a Tax Event, as a condition of such dissolution and distribution,
the Regular Trustees shall have received an opinion of a nationally recognized
independent tax counsel experienced in such matters (a "No Recognition
Opinion"), which opinion may rely on any then applicable published revenue
ruling of the Internal Revenue Service, to the effect that the Holders of the
Preferred Securities will not recognize any gain or loss for United States
federal income tax purposes as a result of the dissolution of the Trust and
distribution of Debentures; and provided, further, that, if and as long as at
the time there is available to the Trust the opportunity to eliminate, within
the 90 Day Period, the Special Event by taking some ministerial action, such as
filing a form or making an election, or pursuing some other similar reasonable
measure that has no adverse effect on the Trust, AES or the Holders of the
Preferred Securities ("Ministerial Action"), the Trust will pursue such measure
in lieu of dissolution.
If in the case of the occurrence of a Tax Event, (i) the Regular
Trustees have received an opinion (a "Redemption Tax Opinion") of nationally
recognized independent tax counsel experienced in such matters that, as a result
of a Tax Event, there is more than an insubstantial risk that AES would be
precluded from deducting the interest on the Debentures for United States
federal income tax purposes even if the Debentures were distributed to the
Holders of Preferred Securities and Common Securities in liquidation of such
Holder's interest in the Trust as described in this paragraph 4(c) or (ii) the
Regular Trustees shall have been informed by such tax counsel that a No
Recognition Opinion cannot be delivered to the Trust, AES shall have the right
at any time, upon not less than 30 nor more than 60 days' notice, to redeem the
Debentures in whole or in part for cash at the Redemption Price within 90 days
following the occurrence of such Tax Event, and promptly following such
redemption Preferred Securities and Common Securities with an aggregate
liquidation amount equal to the aggregate principal amount of the Debentures so
redeemed will be redeemed by the Trust at the Redemption Price on a Pro Rata
basis; provided,
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however, that, if at the time there is available to AES or the Regular Trustees
on behalf of the Trust the opportunity to eliminate, within such 90 day period,
the Tax Event by taking some Ministerial Action, AES or the Regular Trustees on
behalf of the Trust will pursue such measure in lieu of redemption and;
provided, further, that AES shall have no right to redeem the Debentures while
the Regular Trustees on behalf of the Trust are pursuing such Ministerial
Action. The Common Securities will be redeemed Pro Rata with the Preferred
Securities, except that if an Event of Default under the Indenture has occurred
and is continuing, the Preferred Securities will have a priority over the Common
Securities with respect to payment of the Redemption Price.
"Tax Event" means that the Regular Trustees shall have obtained an
opinion of nationally recognized independent tax counsel experienced in such
matters (a "Dissolution Tax Opinion") to the effect that on or after October 23,
1997 as a result of (a) any amendment to, or change (including any announced
prospective change) in, the laws (or any regulations thereunder) of the United
States or any political subdivision or taxing authority thereof or therein, (b)
any amendment to, or change in, an interpretation or application of any such
laws or regulations by any legislative body, court, governmental agency or
regulatory authority (including the enactment of any legislation and the
publication of any judicial decision or regulatory determination), (c) any
interpretation or pronouncement that provides for a position with respect to
such laws or regulations that differs from the theretofore generally accepted
position or (d) any action taken by any governmental agency or regulatory
authority, which amendment or change is enacted, promulgated, issued or
announced or which interpretation or pronouncement is issued or announced or
which action is taken, in each case on or after October 23, 1997, there is more
than an insubstantial risk that (i) the Trust is, or will be within 90 days of
the date thereof, subject to United States federal income tax with respect to
income accrued or received on the Debentures, (ii) the Trust is, or will be
within 90 days of the date thereof, subject to more than a de minimis amount of
other taxes, duties or other governmental charges or (iii) interest payable by
AES to the Trust on the Debentures is not, or within 90 days of the date thereof
will not be, deductible by AES for United States federal income tax purposes.
"Investment Company Event" means that the Regular Trustees shall have
received an opinion of nationally recognized independent counsel experienced in
practice under the Investment Company Act that, as a result of the occurrence of
a change in law or regulation or a change in interpretation or application of
law or regulation by any legislative body, court, governmental agency or
regulatory authority (a "Change in 1940 Act Law"), there is more than an
insubstantial risk that the Trust is or will be considered an Investment Company
which is required to be registered under the Investment Company Act, which
Change in 1940 Act Law becomes effective on or after October 23, 1997.
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On the date fixed for any distribution of Debentures, upon dissolution
of the Trust, (i) the Preferred Securities will no longer be deemed to be
outstanding and (ii) certificates representing Preferred Securities will be
deemed to represent beneficial interests in the Debentures having an aggregate
principal amount equal to the stated liquidation amount of, and bearing accrued
and unpaid interest equal to accrued and unpaid Distributions on, such Preferred
Securities until such certificates are presented to AES or its agent for
transfer or reissuance.
(d) The Trust may not redeem any outstanding Preferred Securities
unless all accrued and unpaid Distributions have been paid on all Preferred
Securities for all quarterly Distribution periods terminating on or prior to the
date of redemption.
(e) If Debentures are distributed to Holders of the Preferred
Securities, AES, pursuant to the terms of the Indenture, will use its best
efforts to have the Debentures listed on the New York Stock Exchange or on such
other exchange as the Preferred Securities were listed immediately prior to the
distribution of the Debentures.
(f) (i) Notice of any redemption of, or notice of distribution of
Debentures in exchange for, the Preferred Securities and Common Securities (a
"Redemption/ Distribution Notice") will be given by the Regular Trustees on
behalf of the Trust by mail to each Holder of Preferred Securities and Common
Securities to be redeemed or exchanged not less than 30 nor more than 60 days
prior to the date fixed for redemption or exchange thereof. For purposes of the
calculation of the date of redemption or exchange and the dates on which notices
are given pursuant to this paragraph (f)(i), a Redemption/Distribution Notice
shall be deemed to be given on the day such notice is first mailed by
first-class mail, postage prepaid, to Holders of Preferred Securities and Common
Securities. Each Redemption/Distribution Notice shall be addressed to the
Holders of Preferred Securities and Common Securities at the address of each
such Holder appearing in the books and records of the Trust. No defect in the
Redemption/Distribution Notice or in the mailing of either thereof with respect
to any Holder shall affect the validity of the redemption or exchange
proceedings with respect to any other Holder.
(ii) In the event that fewer than all the outstanding Preferred
Securities are to be redeemed, the Preferred Securities to be redeemed will be
redeemed Pro Rata from each Holder of Preferred Securities, it being understood
that, in respect of Preferred Securities registered in the name of and held of
record by DTC (or successor Clearing Agency) or any other nominee, the Preferred
Securities will be redeemed from, and the distribution of the proceeds of such
redemption will be made to, each Clearing Agency Participant (or person on whose
behalf such nominee holds such securities) in accordance with the procedures
applied by such agency or nominee.
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(iii) Subject to paragraph 10 hereof, if the Trust gives a Redemption/
Distribution Notice in respect of a redemption of Preferred Securities as
provided in this paragraph 4 (which notice will be irrevocable) then (A) while
the Preferred Securities are in book-entry only form, with respect to the
Preferred Securities, by 12:00 noon, New York City time, on the redemption date,
provided that AES has paid the Property Trustee, in immediately available funds,
a sufficient amount of cash in connection with the related redemption or
maturity of the Debentures, the Property Trustee will deposit irrevocably with
DTC (or successor Clearing Agency) funds sufficient to pay the applicable
Redemption Price with respect to the Preferred Securities and will give DTC (or
successor Clearing Agency) irrevocable instructions and authority to pay the
Redemption Price to the Holders of the Preferred Securities and (B) if the
Preferred Securities are issued in definitive form, with respect to the
Preferred Securities and provided that AES has paid the Property Trustee, in
immediately available funds, a sufficient amount of cash in connection with the
related redemption or maturity of the Debentures, the Property Trustee will pay
the relevant Redemption Price to the Holders of such Preferred Securities by
check mailed to the address of the relevant Holder appearing on the books and
records of the Trust on the redemption date. If a Redemption/Distribution Notice
shall have been given and funds deposited as required, if applicable, then
immediately prior to the close of business on the date of such deposit,
Distributions will cease to accrue on the Preferred Securities called for
redemption, such Preferred Securities will no longer be deemed to be outstanding
and all rights of Holders of such Preferred Securities so called for redemption
will cease, except the right of the Holders of such Preferred Securities to
receive the Redemption Price, but without interest on such Redemption Price.
Neither the Trustees nor the Trust shall be required to register or cause to be
registered the transfer of any Preferred Securities which have been so called
for redemption. If any date fixed for redemption of Preferred Securities is not
a Business Day, then payment of the Redemption Price payable on such date will
be made on the next succeeding day that is a Business Day (and without any
interest or other payment in respect of any such delay) except that, if such
Business Day falls in the next calendar year, such payment will be made on the
immediately preceding Business Day, in each case with the same force and effect
as if made on such date fixed for redemption. If AES fails to repay Debentures
on maturity or on the date fixed for this redemption or if payment of the
Redemption Price in respect of Preferred Securities is improperly withheld or
refused and not paid either by the Property Trustee or by AES pursuant to the
Preferred Securities Guarantee, Distributions on such Preferred Securities will
continue to accrue, from the original redemption date to the date of payment, in
which case the actual payment date will be considered the date fixed for
redemption for purposes of calculating the Redemption Price.
(iv) Redemption/Distribution Notices shall be sent by the Regular
Trustees on behalf of the Trust to DTC or its nominee (or any successor Clearing
Agency or its
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nominee) if the Global Certificates have been issued or, if Definitive Preferred
Security Certificates have been issued, to the Holders of the Preferred
Securities.
(v) Upon the date of dissolution of the Trust and distribution of
Debentures as a result of the occurrence of a Special Event, Preferred Security
Certificates shall be deemed to represent beneficial interests in the Debentures
so distributed, and the Preferred Securities will no longer be deemed
outstanding and may be canceled by the Regular Trustees. The Debentures so
distributed shall have an aggregate principal amount equal to the aggregate
liquidation amount of the Preferred Securities so distributed.
(vi) Subject to the foregoing and applicable law (including, without
limitation, United States federal securities laws), AES or any of its
subsidiaries may at any time and from time to time purchase outstanding
Preferred Securities by tender, in the open market or by private agreement.
5. CONVERSION RIGHTS. The Holders of Securities shall have the right at
any time prior to the close of business on September 30, 2012 (or, in the case
of Securities called for redemption, prior to the close of business on the
Business Day prior to the redemption date), at their option, to cause the
Conversion Agent to convert Securities, on behalf of the converting Holders,
into shares of Common Stock in the manner described herein on and subject to the
following terms and conditions:
The Securities will be convertible at the office of the Conversion
Agent into fully paid and nonassessable shares of Common Stock pursuant to the
Holder's direction to the Conversion Agent to exchange such Securities for a
portion of the Debentures theretofore held by the Trust on the basis of one
Security per $50 principal amount of Debentures, and immediately convert such
amount of Debentures into fully paid and nonassessable shares of Common Stock at
an initial rate of 0.8914 shares of Common Stock per $50 principal amount of
Debentures (which is equivalent to a conversion price of $56.09 per share of
Common Stock, subject to certain adjustments set forth in Sections 5.03 and 5.04
of the Supplemental Indenture (as so adjusted, the "Conversion Price")).
(a) In order to convert Securities into Common Stock the Holder shall
submit to the Conversion Agent at the office referred to above an irrevocable
request to convert Securities on behalf of such Holder (the "Conversion
Request"), together, if the Securities are in certificated form, with such
certificates. The Conversion Request shall (i) set forth the number of
Securities to be converted and the name or names, if other than the Holder, in
which the shares of Common Stock should be issued and (ii) direct the Conversion
Agent (a) to exchange such Securities for a portion of the Debentures held by
the Trust (at the rate of exchange specified in the preceding paragraph) and (b)
to immediately convert such Debentures on behalf of
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such Holder, into Common Stock (at the conversion rate specified in the
preceding paragraph). The Conversion Agent shall notify the Property Trustee of
the Holder's election to exchange Securities for a portion of the Debentures
held by the Trust and the Property Trustee shall, upon receipt of such notice,
deliver to the Conversion Agent the appropriate principal amount of Debentures
for exchange in accordance with this Section. The Conversion Agent shall
thereupon notify the Property Trustee of the Holder's election to convert such
Debentures into shares of Common Stock. If a Security is surrendered for
conversion after the close of business on any regular record date for payment of
a Distribution and before the opening of business on the corresponding
Distribution payment date, then, notwithstanding such conversion, the
Distribution payable on such Distribution payment date will be paid in cash to
the person in whose name the Security is registered at the close of business on
such record date, and (other than a Security or a portion of a Security called
for redemption on a redemption date occurring after such record date and on or
prior to such Distribution payment date) when so surrendered for conversion, the
Security must be accompanied by payment of an amount equal to the Distribution
payable on such Distribution payment date. Except as provided above, neither the
Trust nor the Sponsor will make, or be required to make, any payment, allowance
or adjustment upon any conversion on account of any accumulated and unpaid
Distributions accumulated on the Securities surrendered for conversion, or on
account of any accumulated and unpaid dividends on the shares of Common Stock
issued upon such conversion. Securities shall be deemed to have been converted
immediately prior to the close of business on the day on which the Conversion
Request relating to such Securities is received by the Trust in accordance with
the foregoing provision (the "Conversion Date"). The Person or Persons entitled
to receive Common Stock issuable upon conversion of the Debentures shall be
treated for all purposes as the record holder or holders of such Common Stock at
such time. As promptly as practicable on or after the Conversion Date, the
Sponsor shall issue and deliver at the office of the Conversion Agent a
certificate or certificates for the number of full shares of Common Stock
issuable upon such conversion, together with the cash payment, if any, in lieu
of any fraction of any share to the Person or Persons entitled to receive the
same, unless otherwise directed by the Holder in the Conversion Request and the
Conversion Agent shall distribute such certificate or certificates, together
with the applicable cash payment, if any, to such Person or Persons.
(b) Each Holder of a Security by his acceptance thereof appoints The
First National Bank of Chicago "Conversion Agent" for the purpose of effecting
the conversion of Securities in accordance with this Section. In effecting the
conversion and transactions described in this Section, the Conversion Agent
shall be acting as agent of the Holders of Securities directing it to effect
such conversion transactions. The Conversion Agent is hereby authorized (i) to
exchange Securities from time to time for Debentures held by the Trust in
connection with the conversion of such Securities in accordance with this
section and (ii) to convert all or a portion of the
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Debentures into Common Stock and thereupon to deliver such shares of Common
Stock in accordance with the provisions of this section and to deliver to the
Trust a new Debenture or Debentures for any resulting unconverted principal
amount.
(c) No fractional shares of Common Stock will be issued as a result of
conversion, but in lieu thereof, such fractional interest will be paid in cash
by the Sponsor to the Conversion Agent, which in turn will make such payment to
the Holder or Holders of Securities so converted.
(d) The Sponsor shall at all times reserve and keep available out of
its authorized and unissued Common Stock, solely for issuance upon the
conversion of the Debentures, free from any preemptive or other similar rights,
such number of shares of Common Stock as shall from time to time be issuable
upon the conversion of all the Debentures then outstanding. Notwithstanding the
foregoing, the Sponsor shall be entitled to deliver upon conversion of
Debentures, shares of Common Stock reacquired and held in the treasury of the
Sponsor (in lieu of the issuance of authorized and unissued shares of Common
Stock), so long as any such treasury shares are free and clear of all liens,
charges, security interests or encumbrances. Any shares of Common Stock issued
upon conversion of the Debentures shall be duly authorized, validly issued and
fully paid and nonassessable. The Trust shall deliver the shares of Common Stock
received upon conversion of the Debentures to the converting Holder free and
clear of all liens, charges, security interests and encumbrances, except for
United States withholding taxes. Each of the Sponsor and the Trust shall prepare
and shall use its best efforts to obtain and keep in force such governmental or
regulatory permits or other authorizations as may be required by law, and shall
comply with all applicable requirements as to registration or qualification of
Common Stock (and all requirements to list Common Stock issuable upon conversion
of Debentures that are at the time applicable), in order to enable the Sponsor
to lawfully issue Common Stock to the Trust upon conversion of the Debentures
and the Trust to lawfully deliver Common Stock to each Holder upon conversion of
the Securities.
(e) The Sponsor will pay any and all taxes that may be payable in
respect of the issue or delivery of shares of Common Stock on conversion of
Debentures and the delivery of the shares of Common Stock by the Trust upon
conversion of the Securities. The Sponsor shall not, however, be required to pay
any tax which may be payable in respect of any transfer involved in the issue
and delivery of shares of Common Stock in a name other than that in which the
Securities so converted were registered, and no such issue or delivery shall be
made unless and until the person requesting such issue has paid to the Trust the
amount of any such tax, or has established to the satisfaction of the Trust that
such tax has been paid.
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(f) Nothing in the preceding Paragraph (e) shall limit the requirement
of the Trust to withhold taxes pursuant to the terms of the Securities as set
forth in this Exhibit B to the Declaration or to the Declaration itself or
otherwise require the Property Trustee or the Trust to pay any amounts on
account of such withholdings.
6. VOTING RIGHTS. (a) Except as provided under paragraph 6(b) below and
as otherwise required by law and the Declaration, the Holders of the Preferred
Securities will have no voting rights.
(b) If any proposed amendment to the Declaration provides for, or the
Regular Trustees otherwise propose to effect, (i) any action that would
adversely affect the powers, preferences or special rights of the Securities,
whether by way of amendment to the Declaration or otherwise, or (ii) the
dissolution, winding-up or termination of the Trust, other than in connection
with the distribution of Debentures held by the Property Trustee, upon the
occurrence of a Special Event or in connection with the redemption of Preferred
Securities as a consequence of a redemption of Debentures, then the Holders of
outstanding Securities will be entitled to vote on such amendment or proposal as
a class and such amendment or proposal shall not be effective except with the
approval of the Holders of Securities representing a Majority in liquidation
amount of such Securities; provided, however, that (A) if any amendment or
proposal referred to in clause (i) above would adversely affect only the
Preferred Securities or the Common Securities, then only the affected class will
be entitled to vote on such amendment or proposal and such amendment or proposal
shall not be effective except with the approval of a Majority in liquidation
amount of such class of Securities and (B) amendments to the Declaration shall
be subject to such further requirements as are set forth in Sections 12.01 and
12.02 of the Declaration.
In the event the consent of the Property Trustee, as the holder of the
Debentures, is required under the Indenture with respect to any amendment,
modification or termination of the Indenture or the Debentures, the Property
Trustee shall request the written direction of the Holders of the Securities
with respect to such amendment, modification or termination. The Property
Trustee shall vote with respect to such amendment, modification or termination
as directed by a Majority in liquidation amount of the Securities voting
together as a single class; provided that where such amendment, modification or
termination of the Indenture requires the consent or vote of (1) holders of
Debentures representing a specified percentage greater than a majority in
principal amount of the Debentures or (2) each holder of Debentures, the
Property Trustee may only vote with respect to that amendment, modification or
termination as directed by, in the case of clause (1) above, the vote of Holders
of Securities representing such specified percentage of the aggregate
liquidation amount of the Securities, or, in the case of clause (2) above, each
Holder of Securities; and provided, further, that the Property Trustee shall be
under no obligation to take any action in accordance with the directions of the
Holders of
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Securities unless the Property Trustee shall have received, at the expense of
the Sponsor, an opinion of nationally recognized independent tax counsel
recognized as expert in such matters to the effect that the Trust will not be
classified for United States federal income tax purposes as an association
taxable as a corporation or a partnership on account of such action and will be
treated as a grantor trust for United States federal income tax purposes
following such action.
Subject to Section 2.06 of the Declaration, and the provisions of this
and the next succeeding paragraph, the Holders of a Majority in liquidation
amount of the Preferred Securities, voting separately as a class shall have the
right to (A) on behalf of all Holders of Preferred Securities, waive any past
default that is waivable under the Declaration (subject to, and in accordance
with the Declaration) and (B) direct the time, method and place of conducting
any proceeding for any remedy available to the Property Trustee, or exercising
any trust or power conferred upon the Property Trustee under the Declaration,
including the right to direct the Property Trustee, as the holder of the
Debentures, to (i) direct the time, method and place of conducting any
proceeding for any remedy available to the Debenture Trustee, or exercising any
trust or power conferred on the Debenture Trustee with respect to the
Debentures, (ii) waive any past default that is waivable under Section 6.06 of
the Indenture, or (iii) exercise any right to rescind or annul a declaration
that the principal of all the Debentures shall be due and payable; provided that
where the taking of any action under the Indenture requires the consent or vote
of (1) holders of Debentures representing a specified percentage greater than a
majority in principal amount of the Debentures or (2) each holder of Debentures,
the Property Trustee may only take such action if directed by, in the case of
clause (1) above, the vote of Holders of Preferred Securities representing such
specified percentage of the aggregate liquidation amount of the Preferred
Securities, or, in the case of clause (2) above, each Holder of Preferred
Securities. The Property Trustee shall not revoke any action previously
authorized or approved by a vote of the Holders of the Preferred Securities.
Other than with respect to directing the time, method and place of conducting
any proceeding for any remedy available to the Property Trustee or the Debenture
Trustee as set forth above, the Property Trustee shall be under no obligation to
take any of the foregoing actions at the direction of the Holders of Preferred
Securities unless the Property Trustee shall have received, at the expense of
the Sponsor, an opinion of nationally recognized independent tax counsel
recognized as expert in such matters to the effect that the Trust will not be
classified for United States federal income tax purposes as an association
taxable as a corporation or a partnership on account of such action and will be
treated as a grantor trust for United States federal income tax purposes
following such action. If the Property Trustee fails to enforce its rights under
the Declaration (including, without limitation, its rights, powers and
privileges as a holder of the Debentures under the Indenture), any Holder of
Preferred Securities may, to the extent permitted by law, after a period of 30
days has elapsed from such Holder's written request to the Property Trustee to
enforce such rights, institute a
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legal proceeding directly against AES to enforce the Property Trustee's rights
under the Declaration, without first instituting a legal proceeding against the
Property Trustee or any other Person. Notwithstanding the foregoing, if an Event
of Default has occurred and is continuing and such event is attributable to the
failure of the Sponsor to pay interest or principal on the Debentures on the
date such interest or principal is otherwise payable (or in the case of
redemption, on the redemption date), then the registered holder of the Preferred
Securities may directly institute a proceeding for enforcement of payment to
such holder of the principal of or interest on the Debentures having a principal
amount equal to the aggregate liquidation amount of the Preferred Securities of
such Holder (a "Holder Direct Action") on or after the respective due date
specified in the Debentures. In connection with such Holder Direct Action, the
Sponsor will be subrogated to the rights of such Holder of Preferred Securities
under the Declaration to the extent of any payment made by the Sponsor to such
Holder of Preferred Securities in such Holder Direct Action. Except as provided
in the preceding sentences, the holders of Preferred Securities will not be able
to exercise any other remedy available to the holders of the Debentures.
A waiver of an Indenture Event of Default by the Property Trustee at
the direction of the Holders of the Preferred Securities will constitute a
waiver of the corresponding Event of Default under the Declaration in respect of
the Securities.
Any required approval or direction of Holders of Preferred Securities
may be given at a separate meeting of Holders of Preferred Securities convened
for such purpose, at a meeting of all of the Holders of Securities of the Trust
or pursuant to written consent. The Regular Trustees will cause a notice of any
meeting at which Holders of Preferred Securities are entitled to vote, or of any
matter upon which action by written consent of such Holders is to be taken, to
be mailed to each Holder of record of Preferred Securities. Each such notice
will include a statement setting forth (i) the date of such meeting or the date
by which such action is to be taken, (ii) a description of any resolution
proposed for adoption at such meeting on which such Holders are entitled to vote
or of such matter upon which written consent is sought and (iii) instructions
for the delivery of proxies or consents.
No vote or consent of the Holders of Preferred Securities will be
required for the Trust to redeem and cancel Preferred Securities or distribute
Debentures in accordance with the Declaration.
Notwithstanding that Holders of Preferred Securities are entitled to
vote or consent under any of the circumstances described above, any of the
Preferred Securities at such time that are owned by AES or by any entity
directly or indirectly controlling or controlled by or under direct or indirect
common control with AES shall not be entitled to vote or consent and shall, for
purposes of such vote or consent, be treated as if they were not outstanding.
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Except as provided in this paragraph 6, Holders of the Preferred
Securities will have no rights to increase or decrease the number of Trustees or
to appoint, remove or replace a Trustee, which voting rights are vested solely
in the Holders of the Common Securities.
7. PRO RATA TREATMENT. A reference in these terms of the Preferred
Securities to any payment, distribution or treatment as being "Pro Rata" shall
mean pro rata to each Holder of Securities according to the aggregate
liquidation amount of the Securities held by the relevant Holder in relation to
the aggregate liquidation amount of all Securities outstanding unless, in
relation to a payment, an Event of Default has occurred and is continuing, in
which case any funds available to make such payment shall be paid first to each
Holder of the Preferred Securities pro rata according to the aggregate
liquidation amount of Preferred Securities held by the relevant Holder relative
to the aggregate liquidation amount of all Preferred Securities outstanding, and
only after satisfaction of all amounts owed to the Holders of the Preferred
Securities, to each Holder of Common Securities pro rata according to the
aggregate liquidation amount of Common Securities held by the relevant Holder
relative to the aggregate liquidation amount of all Common Securities
outstanding.
8. RANKING. The Preferred Securities rank pari passu and payment
thereon will be made Pro Rata with the Common Securities except that where an
Event of Default occurs and is continuing, the rights of Holders of Preferred
Securities to payment in respect of Distributions and payments upon liquidation,
redemption or otherwise rank in priority to the rights of Holders of the Common
Securities.
9. MERGERS, CONSOLIDATIONS OR AMALGAMATIONS. The Trust may not
consolidate, amalgamate, merge with or into, or be replaced by, or convey,
transfer or lease its properties and assets to, any corporation or other entity.
10. TRANSFER, EXCHANGE, METHOD OF PAYMENTS. Payment of Distributions
and payments on redemption of the Preferred Securities will be payable, the
transfer of the Preferred Securities will be registrable, and Preferred
Securities will be exchangeable for Preferred Securities of other denominations
of a like aggregate liquidation amount, at the principal corporate trust office
of the Property Trustee in The City of New York; provided that payment of
Distributions may be made at the option of the Regular Trustees on behalf of the
Trust by check mailed to the address of the persons entitled thereto and that
the payment on redemption of any Preferred Security will be made only upon
surrender of such Preferred Security to the Property Trustee.
11. ACCEPTANCE OF INDENTURE AND PREFERRED GUARANTEE. Each Holder of
Preferred Securities, by the acceptance thereof, agrees to the provisions of (i)
the Preferred Guarantee, including the subordination provisions therein and (ii)
the
15
<PAGE>
Indenture and the Debentures, including the subordination provisions of the
Indenture.
12. NO PREEMPTIVE RIGHTS. The Holders of Preferred Securities shall
have no preemptive rights to subscribe to any additional Preferred Securities or
Common Securities.
13. MISCELLANEOUS. These terms shall constitute a part of the
Declaration. The Trust will provide a copy of the Declaration and the Indenture
to a Holder without charge on written request to the Trust at its principal
place of business.
16
<PAGE>
Annex I
FORM OF PREFERRED SECURITY CERTIFICATE
[IF THE PREFERRED SECURITY IS TO BE A GLOBAL CERTIFICATE INSERT - This
Preferred Security is a Global Certificate within the meaning of the Declaration
hereinafter referred to and is registered in the name of The Depository Trust
Company ("DTC") or a nominee of DTC. This Preferred Security is exchangeable for
Preferred Securities registered in the name of a person other than DTC or its
nominee only in the limited circumstances described in the Declaration and no
transfer of this Preferred Security (other than a transfer of this Preferred
Security as a whole by DTC to a nominee of DTC or by a nominee of DTC to DTC or
another nominee of DTC) may be registered except in limited circumstances.
Unless this Preferred Security is presented by an authorized
representative of The Depository Trust Company (55 Water Street, New York) to
the Trust or its agent for registration of transfer, exchange or payment, and
any Preferred Security issued is registered in the name of Cede & Co. or such
other name as requested by an authorized representative of The Depository Trust
Company and any payment hereon is made to Cede & Co., ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS WRONGFUL since the
registered owner hereof, Cede & Co., has an interest herein.]
[IF THE PREFERRED SECURITY IS TO BE A DEFINITIVE CERTIFICATE ISSUED TO
AN INSTITUTIONAL ACCREDITED INVESTOR, ATTACH "ACCREDITED INVESTOR LETTER" IN THE
FORM ATTACHED HERETO]
Number ___________ Preferred Securities
-----------
CUSIP NO. ____________
Certificate Evidencing Preferred Securities
of
AES Trust II
$2.75 Term Convertible Securities, Series B
(liquidation amount $50 per security)
<PAGE>
[If prior to the Transfer Restriction Termination Date or sale pursuant
to an effective registration statement or Rule 144, add legend from Section
9.01(d) of the Declaration.]
AES Trust II, a statutory business trust created under the laws of the
State of Delaware (the "Trust"), hereby certifies that _________ (the "Holder")
is the registered owner of ___________ (______) preferred securities of the
Trust representing undivided beneficial interests in the assets of the Trust
designated the $2.75 Term Convertible Securities, Series B (liquidation amount
$50 per security) (the "Preferred Securities"). The Preferred Securities are
transferable on the books and records of the Trust, in person or by a duly
authorized attorney, upon surrender of this certificate duly endorsed and in
proper form for transfer. The designations, rights, privileges, restrictions,
preferences and other terms and provisions of the Preferred Securities are set
forth in, and this certificate and the Preferred Securities represented hereby
are issued and shall in all respects be subject to the terms and provisions of,
the Amended and Restated Declaration of Trust of the Trust dated as of October
29, 1997, as the same may be amended from time to time (the "Declaration")
including the designation of the terms of Preferred Securities as set forth in
Exhibit B thereto. The Preferred Securities and the Common Securities issued by
the Trust pursuant to the Declaration represent undivided beneficial interests
in the assets of the Trust, including the Debentures (as defined in the
Declaration) issued by The AES Corporation, a Delaware corporation ("AES"), to
the Trust pursuant to the Indenture referred to in the Declaration. The Holder
is entitled to the benefits of the Guarantee Agreement of AES dated as of
October 29, 1997 (the "Guarantee") to the extent provided therein. The Trust
will furnish a copy of the Declaration, the Guarantee and the Indenture to the
Holder without charge upon written request to the Trust at its principal place
of business or registered office.
The Holder of this Certificate, by accepting this Certificate, is
deemed to have (i) agreed to the terms of the Indenture and the Debentures,
including that the Debentures are subordinate and junior in right of payment to
all Senior and Subordinated Debt (as defined in the Indenture) as and to the
extent provided in the Indenture and (ii) agreed to the terms of the Guarantee,
including that the Guarantee is subordinate and junior in right of payment to
all other liabilities of AES, including the Debentures, and ranks pari passu in
right payment with the most senior preferred stock issued, from time to time, by
AES.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
Unless the Property Trustee's Certificate of Authentication hereon has
been properly executed, these Trust Preferred Securities shall not be entitled
to any benefit under the Declaration or be valid or obligatory for any purpose.
2
<PAGE>
IN WITNESS WHEREOF, the Trustees of the Trust have executed this
certificate this twenty-ninth day of October, 1997.
AES TRUST II
By:_________________________, as Trustee
Name:
Title: Trustee
By:_________________________, as Trustee
Name:
Title: Trustee
3
<PAGE>
[FORM OF CERTIFICATE OF AUTHENTICATION]
PROPERTY TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the
Preferred Securities referred to in the within-mentioned Declaration.
Dated: _______ __, 199
THE FIRST NATIONAL BANK
OF CHICAGO,
as Property Trustee or as Authenticating Agent
By: By:
---------------------------- ----------------------------
Authorized Signatory Authorized Signatory
4
<PAGE>
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Preferred Security will be fixed at a
rate per annum of $2.75 per Preferred Security, such rate being the rate of
interest payable on the Debentures to be held by the Property Trustee.
Distributions in arrears for more than one quarter will bear interest thereon at
the rate per annum of 5.50% thereof (to the extent permitted by law) compounded
quarterly. The term "Distributions" as used herein means such cash distributions
and any such interest payable unless otherwise stated. A Distribution is payable
only to the extent that payments are made in respect of the Debentures held by
the Property Trustee. The amount of Distributions payable for any period will be
computed on the basis of a 360-day year of twelve 30-day months.
Except as otherwise described below, distributions on the Preferred
Securities will be cumulative, will accrue from October 29, 1997 and will be
payable quarterly in arrears, on the last day of each quarter, commencing on
December 31, 1997, but only if and to the extent that interest payments are made
in respect of the Debentures held by the Property Trustee. So long as AES shall
not be in default in the payment of interest on the Debentures, AES has the
right under the Indenture for the Debentures to defer payments of interest by
extending the interest payment period from time to time on the Debentures for a
period not exceeding 20 consecutive quarters (each an "Extension Period") and,
as a consequence, quarterly Distributions will continue to accrue with interest
thereon (to the extent permitted by applicable law) at the rate of 5.50% per
annum, compounded quarterly during such Extension period; provided that no
Extension Period shall last beyond the date of maturity or any redemption date
of the Debentures. Prior to the termination of any such Extension Period, AES
may commence a new Extension Period; provided that such Extension Period
together with all such previous and further extensions thereof may not exceed 20
consecutive quarterly interest periods. Payments of accrued Distributions will
be payable to Holders as they appear on the books and records of the Trust on
the first record date after the end of the Extension Period. Upon the
termination of any Extension Period and the payment of all amounts then due, AES
may commence a new Extension Period, subject to the above requirements.
The Preferred Securities shall be redeemable as provided in the
Declaration.
The Preferred Securities shall be convertible into shares of Common
Stock, through (i) the exchange of Preferred Securities for a portion of the
Debentures and (ii) the immediate conversion of such Debentures into Common
Stock, in the manner and according to the terms set forth in the Declaration.
5
<PAGE>
CONVERSION REQUEST
To: The First National Bank of Chicago as Property Trustee of AES Trust
II
The undersigned owner of these Preferred Securities hereby irrevocably
exercises the option to convert these Preferred Securities, or the portion below
designated, into common stock of The AES Corporation (the "Common Stock") in
accordance with the terms of the Amended and Restated Declaration of Trust,
dated as of October 29, 1997 (as amended from time to time, the "Declaration"),
by William R. Luraschi, Barry J. Sharp and Willard Hoagland as Regular Trustees,
First Chicago Delaware Inc., as Delaware Trustee, The First National Bank of
Chicago, as Property Trustee, The AES Corporation, as Sponsor, and by the
Holders, from time to time, of undivided beneficial interests in the assets of
the Trust to be issued pursuant to the Declaration. Pursuant to the
aforementioned exercise of the option to convert these Preferred Securities, the
undersigned hereby directs the Conversion Agent (as that term is defined in the
Declaration) to (i) exchange such Preferred Securities for a portion of the
Debentures (as that term is defined in the Declaration) held by the Trust (at
the rate of exchange specified in the terms of the Preferred Securities set
forth as Exhibit B to the Declaration) and (ii) immediately convert such
Debentures on behalf of the undersigned, into Common Stock (at the conversion
rate specified in the terms of the Trust Preferred Securities set forth as
Exhibit B to the Declaration).
The undersigned does also hereby direct the Conversion Agent that the
shares issuable and deliverable upon conversion, together with any check in
payment for fractional shares, be issued in the name of and delivered to the
undersigned, unless a different name has been indicated in the assignment below.
If shares are to be issued in the name of a person other than the undersigned,
the undersigned will pay all transfer taxes payable with respect thereto.
6
<PAGE>
Date: _______________, _____
in whole ___ in part ___
Number of Preferred Securities to be
converted:
-----------------------
If a name or names other than the
undersigned, please indicate in the
spaces below the name or names in
which the shares of Common Stock are
to be issued, along with the address
or addresses of such person or
persons
----------------------------------
----------------------------------
----------------------------------
----------------------------------
----------------------------------
----------------------------------
----------------------------------
7
<PAGE>
Signature (for conversion only)
Please Print or Typewrite Name and Address, Including
Zip Code, and Social Security or Other Identifying
Number
----------------------------------
----------------------------------
----------------------------------
Signature Guarantee:* _________
- -------------------
1(Signature must be guaranteed by an "eligible guarantor institution" that is, a
bank, stockbroker, savings and loan association or credit union meeting the
requirements of the Conversion Agent, which requirements include membership or
participation in the Securities Transfer Agents Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Conversion
Agent in addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.)
8
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Preferred
Security to:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Insert assignee's social security or tax identification number)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Insert address and zip code of assignee)
and irrevocably appoints
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
agent to transfer this Preferred Security Certificate on the books of the Trust.
The agent may substitute another to act for him or her.
Date: _________________________
Signature: ____________________
NOTICE: THE SIGNATURE(S) TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME(S) AS
WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION
OR ENLARGEMENT OR ANY CHANGE WHATEVER.
9
<PAGE>
[FORM OF ASSIGNMENT FOR PREFERRED SECURITY]
For value received ___________________ hereby sell(s), assign(s)
and transfer(s) unto__________________________________
(Please insert social security or other
taxpayer identification number of assignee.)
the within security and hereby irrevocably constitutes and appoints
______________ attorney to transfer the said security on the books of the
Company, with full power of substitution in the premises.
In connection with any transfer of the within security occurring prior to the
Transfer Restriction Termination Date, the undersigned confirms that such
security is being transferred:
[ ] To The AES Corporation or a subsidiary thereof; or
[ ] Pursuant to and in compliance with Rule 144A under the Securities Act
of 1933, as amended; or
[ ] To an Institutional Accredited Investor pursuant to and in compliance
with the Securities Act of 1933, as amended; or
[ ] Pursuant to and in compliance with Regulation S under the Securities
Act of 1933, as amended; or
[ ] Pursuant to and in compliance with Rule 144 under the Securities Act
of 1933, as amended;
and unless the box below is checked, the undersigned confirms that such security
is not being transferred to an "affiliate" of the Company as defined in Rule 144
under the Securities Act of 1933, as amended (an "Affiliate"):
10
<PAGE>
[ ] The transferee is an Affiliate of the Company.
Dated: __________________________
Number of Securities
to be Assigned: ___________________
----------------------------
----------------------------
Signature(s)
Signature(s) must be guaranteed by a
commercial bank or trust company or
a member firm of a major stock
exchange.
---------------------------------
Signature Guarantee
NOTICE: The above signatures of the holder(s) hereof must correspond with the
name as written upon the face of this Security in every particular without
alteration or enlargement or any change whatever.
11
<PAGE>
FORM OF CERTIFICATE TO BE DELIVERED
IN CONNECTION WITH (I) TRANSFERS OF INTERESTS IN THE
TEMPORARY REGULATION S GLOBAL SECURITY AND
(II) TRANSFERS OF INTEREST TO NON-U.S. PERSONS
The First National Bank of Chicago
One First National Plaza, Suite 0126
Chicago, Illinois 60670-0126
Attention: Corporate Trust Administrator
Re: The AES Trust II (the "Trust")
Preferred Securities
------------------------------
Dear Sirs or Mesdames:
In connection with our proposed sale of the number of Preferred
Securities designated below, the undersigned owner confirms that such sale has
been effected pursuant to and in accordance with Regulation S under the
Securities Act of 1933, as amended, and, accordingly, represents that:
(1) the offer of the Trust Preferred Securities was not made to a
person in the United States;
(2) at the time the buy order was originated, the transferee was
outside the United States or we and any person acting on our behalf reasonably
believed that the transferee was outside the United States;
(3) no directed selling efforts have been made by us in the United
States in contravention of the requirements of Rule 903(b) or Rule 904(b) of
Regulation S, as applicable; and
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the U.S. Securities Act of 1933.
12
<PAGE>
You and the Trust are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this certificate have the
meanings set forth in Regulation S.
Date: ___________, ____
Very truly yours,
[Name of Transferor]
By:
--------------------------------
Authorized Signature
Number of Trust Preferred Securities
to be sold:
------------------------------------
Please Print or Typewrite Name and
Address, Including Zip Code, and
Social Security or Other Identifying
Number:
------------------------------------
------------------------------------
------------------------------------
13
<PAGE>
ACCREDITED INVESTOR LETTER
, 199
The First National Bank of Chicago
One First National Plaza
Chicago, Illinois 60670-0126
Dear Sirs:
In connection with our proposed purchase of the Preferred Securities
described below (the "Preferred Securities") of AES Trust II (the "Issuer"), we
confirm that:
1. We have received a copy of the Offering Memorandum (the "Offering
Memorandum"), dated October 24, 1997, relating to the Preferred
Securities and the undersigned agrees to be bound by, and not to
resell, pledge or otherwise transfer the Preferred Securities
except in compliance with, such restrictions and conditions and
the Securities Act of 1933, as amended (the "Securities Act").
2. We understand that any subsequent transfer of the Preferred
Securities is subject to certain restrictions and conditions set
forth in the Amended and Restated Declaration of Trust dated as of
October 29, 1997 (the "Declaration") relating to the Preferred
Securities and the undersigned agrees to be bound by, and not to
resell, pledge or otherwise transfer the Preferred Securities
except in compliance with, such restrictions and conditions and
the Securities Act of 1933, as amended (the "Securities Act").
3. We understand that the offer and the sale of the Preferred
Securities has not been registered under the Securities Act, and
that the Preferred Securities may not be offered or sold except as
permitted in the following sentence. We agree, on our own behalf
and on behalf of any accounts for which we are acting as
hereinafter stated, that if we should sell any Preferred
Securities or, if applicable, the Junior Subordinated Debentures
or Common Stock (together, the "Securities") within two years
after the original issuance of the Preferred Securities, we will
do so only (A) to The AES Corporation (the "Company") or any
subsidiary thereof, (B) inside the United States in accordance
with Rule 144A under the Securities Act to a "qualified
institutional buyer" (as defined therein), (C) inside the
14
<PAGE>
United States to an institutional "accredited investor" (as
defined below) that, prior to such transfer, furnishes to the
Trustee a signed letter containing certain representations and
agreements relating to the restrictions on transfer of the
Preferred Securities (the form of which letter can be obtained
from the Trustee) and, if such transfer is in respect of Preferred
Securities with an aggregate liquidation preference of less than
$250,000, an opinion of counsel acceptable to the Company that
such transfer is in compliance with the Securities Act, (D)
outside the United States in accordance with the Rule 904 under
the Securities Act (E) pursuant to the exemption from registration
provided by Rule 144 under the Securities Act (if available) or
(F) pursuant to an effective registration statement under the
Securities Act, and we further agree to provide to any person
purchasing any of the Preferred Securities from us a notice
advising such purchaser that resales of the Preferred Securities
are restricted as stated herein.
4. We understand that, on any proposed resale of any Securities, we
will be required to furnish to the Issuer and the Trustee such
certifications, legal opinions and other information as the Issuer
and the Trustee may reasonably require to confirm that the
proposed sale complies with the foregoing restrictions. We further
understand that the Securities purchased by us will bear a legend
to the foregoing effect.
5. We are a institutional "accredited investor" (as defined in rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities
Act) and have such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and
risks of our investment in the Preferred Securities, and we and
any accounts for which we are acting are each able to bear the
economic risks of our or their investment.
6. We are acquiring the Preferred Securities purchased by us for our
own account for one or more accounts (each of which is an
institutional "accredited investor") as to each of which we
exercise sole investment discretion.
15
<PAGE>
You. the Issuer and the Trustee are entitled to rely upon this letter
and are irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby.
Very truly yours,
By:
---------------------------------
Name:
Title:
16
<PAGE>
EXHIBIT C
TERMS OF
COMMON SECURITIES
Pursuant to Section 7.01 of the Amended and Restated Declaration of
Trust of AES Capital Trust II dated as of October 29, 1997 (as amended from time
to time, the "Declaration"), the designations, rights, privileges, restrictions,
preferences and other terms and provisions of the Common Securities are set
forth below (each capitalized term used but not defined herein having the
meaning set forth in the Declaration):
1. DESIGNATION AND NUMBER. Common Securities of the Trust with an
aggregate liquidation amount in the assets of the Trust of Nine Million Two
Hundred Seventy-Eight Thousand Three Hundred Fifty Dollars ($9,278,400 (plus up
to an additional One Million Three Hundred Ninety-One Thousand Seven Hundred
Fifty Dollars ($1,391,800) issuable upon exercise of the overallotment option
set forth in the Purchase Agreement) and a liquidation amount in the assets of
the Trust of $50 per Common Security, are hereby designated as "$2.75 Common
Trust Securities". The Common Security Certificates evidencing the Common
Securities shall be substantially in the form attached hereto as Annex I, with
such changes and additions thereto or deletions therefrom as may be required by
ordinary usage, custom or practice. The Common Securities are to be issued and
sold to The AES Corporation ("AES") in consideration of $9,278,400 in cash. In
connection with the issuance and sale of the Preferred Securities and the Common
Securities, the Trust will purchase as trust assets Debentures of AES having an
aggregate principal amount equal to the aggregate liquidation amount of the
Preferred Securities and Common Securities so issued, and bearing interest at an
annual rate equal to the annual Distribution rate on the Preferred Securities
and Common Securities and having payment and redemption provisions which
correspond to the payment and redemption provisions of the Preferred Securities
and Common Securities.
2. DISTRIBUTIONS. (a) Distributions payable on each Common Security
will be fixed at a rate per annum of $2.75 (the "Coupon Rate") per Common
Security. Distributions in arrears for more than one calendar quarter will bear
interest at the rate per annum of 5.50% thereof (to the extent permitted by
applicable law), compounded quarterly. The term "Distributions" as used in these
terms means such periodic cash distributions and any such interest payable
unless otherwise stated. A Distribution will be made by the Property Trustee
only to the extent that interest payments are made in respect of the Debentures
held by the Property Trustee. The amount of
<PAGE>
Distributions payable for any period will be computed for any monthly
Distribution period on the basis of a 360-day year of twelve 30 day months.
(b) Distributions on the Common Securities will be cumulative, will
accrue from October 29, 1997 and will be payable quarterly in arrears, on the
last day of each month commencing on December 31, 1997, except as otherwise
described below, but only if and to the extent that interest payments are made
in respect of the Debentures held by the Property Trustee. So long as AES shall
not be in default in the payment of interest on the Debentures, AES has the
right under the Indenture for the Debentures to defer payments of interest by
extending the interest payment period from time to time on the Debentures for a
period not exceeding 20 consecutive quarterly interest periods (each, an
"Extension Period") and, as a consequence, quarterly Distributions will continue
to accrue with interest thereon (to the extent permitted by applicable law) at
the rate of 5.50% per annum, compounded quarterly during any such Extension
Period; provided that no Extension Period shall last beyond the date of maturity
or any redemption date of the Debentures. Prior to the termination of any such
Extension Period, AES may further extend such Extension Period; provided that
such Extension Period together with all such previous and further extensions
thereof may not exceed 20 consecutive quarterly interest periods. Upon the
termination of any Extension Period and the payment of all amounts then due, AES
may commence a new Extension Period, subject to the above requirements. Payments
of accrued Distributions will be payable to Holders of Common Securities as they
appear on the books and records of the Trust on the first record date after the
end of the Extension Period.
(c) Distributions on the Common Securities will be payable promptly by
the Property Trustee (or other Paying Agent) upon receipt of immediately
available funds to the Holders thereof as they appear on the books and records
of the Trust on the relevant record dates which will be one business day prior
to the relevant Distribution date unless the Preferred Securities are no longer
in book-entry only form in which event the Regular Trustees shall have the right
to select relevant record dates which shall be more than one business day prior
to the relevant payment dates. Distributions payable on any Common Securities
that are not punctually paid on any Distribution date as a result of AES having
failed to make the corresponding interest payment on the Debentures will
forthwith cease to be payable to the person in whose name such Common Security
is registered on the relevant record date, and such defaulted Distribution will
instead be payable to the person in whose name such Common Security is
registered on the special record date established by the Regular Trustees, which
record date shall correspond to the special record date or other specified date
determined in accordance with the Indenture; provided, however, that
Distributions shall not be considered payable on any Distribution payment date
falling within an Extension Period unless AES has elected to make a full or
partial payment of interest accrued on the Debentures on such Distribution
payment date. Subject to any
2
<PAGE>
applicable laws and regulations and the provisions of the Declaration, each
payment in respect of the Common Securities will be made as described in
paragraph 10 hereof. If any date on which Distributions are payable on the
Common Securities is not a Business Day, then payment of the Distribution
payable on such date will be made on the next succeeding day that is a Business
Day (and without any interest or other payment in respect of any such delay)
except that, if such Business Day is in the next succeeding calendar year, such
payment shall be made on the immediately preceding Business Day, in each case
with the same force and effect as if made on such date.
(d) All Distributions paid with respect to the Common Securities and
the Preferred Securities will be paid Pro Rata to the Holders thereof entitled
thereto. If an Event of Default has occurred and is continuing, the Preferred
Securities shall have a priority over the Common Securities with respect to
Distributions.
(e) In the event of an election by the Holder to convert its Securities
through the Conversion Agent into Common Stock pursuant to the terms of the
Securities as set forth in this Exhibit C to the Declaration, no payment,
allowance or adjustment shall be made with respect to accumulated and unpaid
Distributions on such Securities, or be required to be made; provided, however,
that if a Security is surrendered for conversion after the close of business on
any regular record date for payment of a Distribution date will be paid in cash
to the person in whose name the Security is registered at the close of business
on such record date, and (other than a Security or a portion of a Security
called for redemption on a redemption date occurring after such record date and
on or prior to such Distribution date) when so surrendered for conversion, the
Security must be accompanied by payment of an amount equal to the Distribution
payable on such Distribution date.
(f) In the event that there is any money or other property held by or
for the Trust that is not accounted for under the Declaration, such money or
property shall be distributed Pro Rata among the Holders of the Preferred
Securities and Common Securities.
3. LIQUIDATION DISTRIBUTION UPON DISSOLUTION. In the event of any
voluntary or involuntary dissolution, winding-up or termination of the Trust,
the Holders of the Preferred Securities and Common Securities at the date of the
dissolution, winding-up or termination, as the case may be, will be entitled to
receive Pro Rata solely out of the assets of the Trust available for
distribution to Holders of Preferred Securities and Common Securities, after
satisfaction of liabilities to creditors, an amount equal to the aggregate of
the stated liquidation amount of $50 per Preferred Security and Common Security
plus accrued and unpaid Distributions thereon to the date of payment (such
amount being the "Liquidation Distribution"), unless, in connection with such
dissolution, winding-up or termination, and after
3
<PAGE>
satisfaction of liabilities to creditors, Debentures in an aggregate principal
amount equal to the aggregate stated liquidation amount of such Preferred
Securities and Common Securities bearing accrued and unpaid interest in an
amount equal to the accrued and unpaid Distributions on, such Preferred
Securities and Common Securities, shall be distributed Pro Rata to the Holders
of the Preferred Securities and Common Securities in exchange for such
Securities.
If, upon any such dissolution, the Liquidation Distribution can be paid
only in part because the Trust has insufficient assets available to pay in full
the aggregate Liquidation Distribution, then the amounts payable directly by the
Trust on the Preferred Securities and Common Securities shall be paid, subject
to the next paragraph, on a Pro Rata basis.
Holders of Common Securities will be entitled to receive Liquidation
Distributions upon any such dissolution Pro Rata with Holders of Preferred
Securities, except that if an Event of Default has occurred and is continuing,
the Preferred Securities shall have a priority over the Common Securities with
respect to such Liquidation Distribution.
4. REDEMPTION AND DISTRIBUTION OF DEBENTURES. The Preferred Securities
and Common Securities may only be redeemed if Debentures having an aggregate
principal amount equal to the aggregate liquidation amount of the Preferred
Securities and Common Securities are repaid, redeemed or distributed as set
forth below:
(a) Upon the repayment of the Debentures, in whole or in part, whether
at maturity, upon redemption at any time or from time to time on or after
September 30, 2000, or at any time in certain circumstances upon the occurrence
of a Tax Event, the proceeds of such repayment will be promptly applied to
redeem Pro Rata Preferred Securities and Common Securities having an aggregate
liquidation amount equal to the aggregate principal amount of the Debentures so
repaid or redeemed, upon not less than 30 nor more than 60 days' notice, at a
redemption price per Preferred and Common Security equal to the redemption price
of the Debentures, together with accrued and unpaid Distributions thereon
through the date of redemption, payable in cash (the "Redemption Price"). The
date of any such repayment or redemption of Preferred Securities and Common
Securities shall be established to coincide with the repayment or redemption
date of the Debentures.
(b) If fewer than all the outstanding Preferred Securities and Common
Securities are to be so redeemed, the Preferred Securities and the Common
Securities will be redeemed Pro Rata and the Common Securities to be redeemed
will be redeemed as described in paragraph 4(e)(ii) below. If a partial
redemption would result in the delisting of the Preferred Securities by any
national securities exchange or other organization on which the Preferred
Securities are then listed, AES pursuant
4
<PAGE>
to the Indenture will only redeem Debentures in whole and, as a result, the
Trust may only redeem the Common Securities in whole.
(c) If, at any time, a Tax Event or an Investment Company Event (each
as hereinafter defined, and each a "Special Event") shall occur and be
continuing, the Regular Trustees shall, unless the Debentures are redeemed in
the limited circumstances described below, dissolve the Trust and, after
satisfaction of creditors, cause Debentures held by the Property Trustee having
an aggregate principal amount equal to the aggregate stated liquidation amount
of and accrued and unpaid interest equal to accrued and unpaid Distributions on,
and having the same record date for payment as the Preferred Securities and
Common Securities, to be distributed to the Holders of the Preferred Securities
and Common Securities on a Pro Rata basis in liquidation of such Holders'
interests in the Trust, within 90 days following the occurrence of such Special
Event (the "90 Day Period"); provided, however, that in the case of the
occurrence of a Tax Event, as a condition of such dissolution and distribution,
the Regular Trustees shall have received an opinion of a nationally recognized
independent tax counsel experienced in such matters (a "No Recognition
Opinion"), which opinion may rely on any then applicable published revenue
rulings of the Internal Revenue Service, to the effect that the Holders of the
Preferred Securities will not recognize any gain or loss for United States
federal income tax purposes as a result of the dissolution of the Trust and
distribution of Debentures; and provided, further, that, if and as long as at
the time there is available to the Trust the opportunity to eliminate, within
such 90 Day Period, the Special Event by taking some ministerial action, such as
filing a form or making an election, or pursuing some other similar reasonable
measure that has no adverse effect on the Trust, AES or the Holders of the
Preferred Securities ("Ministerial Action") the Trust will pursue such measure
in lieu of dissolution.
If in the case of the occurrence of a Tax Event, (i) the Regular
Trustees have received an opinion (a "Redemption Tax Opinion") of nationally
recognized independent tax counsel experienced in such matters that, as a result
of a Tax Event, there is more than an insubstantial risk that AES would be
precluded from deducting the interest on the Debentures for United States
federal income tax purposes even if the Debentures were distributed to the
Holders of Preferred Securities and Common Securities in liquidation of such
Holder's interest in the Trust as described in this paragraph 4(c) or (ii) the
Regular Trustees shall have been informed by such tax counsel that a No
Recognition Opinion cannot be delivered to the Trust, AES shall have the right
at any time, upon not less than 30 nor more than 60 days' notice, to redeem the
Debentures in whole or in part for cash at the Redemption Price within 90 days
following the occurrence of such Tax Event, and promptly following such
redemption Preferred Securities and Common Securities with an aggregate
liquidation amount equal to the aggregate principal amount of the Debentures so
redeemed will be redeemed by the Trust at the Redemption Price on a Pro Rata
basis: provided,
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<PAGE>
however, that, if at the time there is available to AES or the Regular Trustees
on behalf of the Trust the opportunity to eliminate, within such 90 day period,
the Tax Event by taking some Ministerial Action, AES or the Holders of the
Preferred Securities, AES or the Regular Trustees on behalf of the Trust will
pursue such measure in lieu of redemption; and provided, further, that AES shall
have no right to redeem the Debentures while the Regular Trustees on behalf of
the Trust are pursuing such Ministerial Action. The Common Securities will be
redeemed Pro Rata with the Preferred Securities, except that if an Event of
Default under the Indenture has occurred and is continuing, the Preferred
Securities will have a priority over the Common Securities with respect to
payment of the Redemption Price.
"Tax Event" means that the Regular Trustees shall have obtained an
opinion of nationally recognized independent tax counsel experienced in such
matters (a "Dissolution Tax Opinion") to the effect that on or after October 23,
1997 as a result of (a) any amendment to, or change (including any announced
prospective change) in, the laws (or any regulations thereunder) of the United
States or any political subdivision or taxing authority thereof or therein, (b)
any amendment to, or change in, an interpretation or application of any such
laws or regulations by any legislative body, court, governmental agency or
regulatory authority (including the enactment of any legislation and the
publication of any judicial decision or regulatory determination), (c) any
interpretation or pronouncement that provides for a position with respect to
such laws or regulations that differs from the theretofore generally accepted
position or (d) any action taken by any governmental agency or regulatory
authority, which amendment or change is enacted, promulgated, issued or
announced or which interpretation or pronouncement is issued or announced or
which action is taken, in each case on or after October 23, 1997, there is more
than an insubstantial risk that (i) the Trust is, or will be within 90 days of
the date thereof, subject to United States federal income tax with respect to
income accrued or received on the Debentures, (ii) the Trust is, or will be
within 90 days of the date thereof, subject to more than a de minimis amount of
taxes, duties or other governmental charges or (iii) interest payable by AES to
the Trust on the Debentures is not, or within 90 days of the date thereof will
not be, deductible by AES for United States federal income tax purposes.
"Investment Company Event" means that the Regular Trustees shall have
received an opinion of nationally recognized independent counsel experienced in
practice under the Investment Company Act that, as a result of the occurrence of
a change in law or regulation or a change in interpretation or application of
law or regulation by any legislative body, court, governmental agency or
regulatory authority (a "Change in 1940 Act Law"), there is more than an
insubstantial risk that the Trust is or will be considered an Investment Company
which is required to be registered under the Investment Company Act, which
Change in 1940 Act Law becomes effective on or after October 23, 1997.
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<PAGE>
On the date fixed for any distribution of Debentures, upon dissolution
of the Trust, (i) the Common Securities will no longer be deemed to be
outstanding and (ii) any certificates representing Common Securities will be
deemed to represent beneficial interests in the Debentures having an aggregate
principal amount equal to the stated liquidation amount of, and bearing accrued
and unpaid interest equal to accrued and unpaid Distributions on, such Common
Securities until such certificates are presented to AES or its agent for
transfer or reissuance.
(d) The Trust may not redeem any outstanding Common Securities unless
all accrued and unpaid Distributions have been paid on all Common Securities for
all quarterly Distribution periods terminating on or prior to the date of
redemption.
(e)(i) Notice of any redemption of, or notice of distribution of
Debentures in exchange for, the Preferred Securities and Common Securities (a
"Redemption/ Distribution Notice") will be given by the Regular Trustees on
behalf of the Trust by mail to each Holder of Preferred Securities and Common
Securities to be redeemed or exchanged not less than 30 nor more than 60 days
prior to the date fixed for redemption or exchange thereof. For purposes of the
calculation of the date of redemption or exchange and the dates on which notices
are given pursuant to this paragraph (e)(i), a Redemption/Distribution Notice
shall be deemed to be given on the day such notice is first mailed by
first-class mail, postage prepaid, to Holders of Preferred Securities and Common
Securities. Each Redemption/Distribution Notice shall be addressed to the
Holders of Preferred Securities and Common Securities at the address of each
such Holder appearing in the books and records of the Trust. No defect in the
Redemption/Distribution Notice or in the mailing of either thereof with respect
to any Holder shall affect the validity of the redemption or exchange
proceedings with respect to any other Holder.
(ii) In the event that fewer than all the outstanding Common Securities
are to be redeemed, the Common Securities to be redeemed will be redeemed Pro
Rata from each Holder of Common Securities (subject to adjustment to eliminate
fractional Common Securities).
(iii) If the Trust gives a Redemption/Distribution Notice in respect of
a redemption of Common Securities as provided in this paragraph 4 (which notice
will be irrevocable) then immediately prior to the close of business on the
redemption date, provided that AES has paid to the Property Trustee in
immediately available funds a sufficient amount of cash in connection with the
related redemption or maturity of the Debentures, Distributions will cease to
accrue on the Common Securities called for redemption, such Common Securities
will no longer be deemed to be outstanding and all rights of Holders of such
Common Securities so called for redemption will cease, except the right of the
Holders of such Common Securities to receive the Redemption Price, but without
interest on such Redemption Price.
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<PAGE>
Neither the Trustees nor the Trust shall be required to register or cause to be
registered the transfer of any Common Securities which have been so called for
redemption. If any date fixed for redemption of Common Securities is not a
Business Day, then payment of the Redemption Price payable on such date will be
made on the next succeeding day that is a Business Day (and without any interest
or other payment in respect of any such delay) except that, if such Business Day
falls in the next calendar year, such payment will be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date fixed for redemption. If payment of the Redemption Price in respect
of Common Securities is improperly withheld or refused and not paid by the
Property Trustee, Distributions on such Common Securities will continue to
accrue, from the original redemption date to the date of payment, in which case
the actual payment date will be considered the date fixed for redemption for
purposes of calculating the Redemption Price.
(iv) Redemption/Distribution Notices shall be sent by the Regular
Trustees on behalf of the Trust to the Holders of the Common Securities.
(v) Upon the date of dissolution of the Trust and distribution of
Debentures as a result of the occurrence of a Special Event, Common Security
Certificates shall be deemed to represent beneficial interests in the Debentures
so distributed, and the Common Securities will no longer be deemed outstanding
and may be canceled by the Regular Trustees. The Debentures so distributed shall
have an aggregate principal amount equal to the aggregate liquidation amount of
the Common Securities so distributed.
5. CONVERSION RIGHTS. The Holders of Securities shall have the right at
any time prior to the close of business on September 30, 2012 (or, in the case
of Securities called for redemption, prior to the close of business on the
Business Day prior to the redemption date), at their option, to cause the
Conversion Agent to convert Securities, on behalf of the converting Holders,
into shares of Common Stock in the manner described herein on and subject to the
following terms and conditions:
The Securities will be convertible at the office of the Conversion
Agent into fully paid and nonassessable shares of Common Stock pursuant to the
Holder's direction to the Conversion Agent to exchange such Securities for a
portion of the Debentures theretofore held by the Trust on the basis of one
Security per $50 principal amount of Debentures, and immediately convert such
amount of Debentures into fully paid and nonassessable shares of Common Stock at
an initial rate of 0.8914 shares of Common Stock per $50 principal amount of
Debentures (which is equivalent to a conversion price of $56.09 per share of
Common Stock, subject to certain adjustments set forth in Sections 5.03 and 5.04
of the Supplemental Indenture (as so adjusted, "Conversion Price")).
8
<PAGE>
(a) In order to convert Securities into Common Stock the Holder shall
submit to the Conversion Agent at the office referred to above an irrevocable
request to convert Securities on behalf of such Holder (the "Conversion
Request"), together, if the Securities are in certificated form, with such
certificates. The Conversion Request shall (i) set forth the number of
Securities to be converted and the name or names, if other than the Holder, in
which the shares of Common Stock should be issued and (ii) direct the Conversion
Agent (a) to exchange such Securities for a portion of the Debentures held by
the Trust (at the rate of exchange specified in the preceding paragraph) and (b)
to immediately convert such Debentures on behalf of such Holder, into Common
Stock (at the conversion rate specified in the preceding paragraph). The
Conversion Agent shall notify the Property Trustee of the Holder's election to
exchange Securities for a portion of the Debentures held by the Trust and the
Property Trustee shall, upon receipt of such notice, deliver to the Conversion
Agent the appropriate principal amount of Debentures for exchange in accordance
with this Section. The Conversion Agent shall thereupon notify the Property
Trustee of the Holder's election to convert such Debentures into shares of
Common Stock. If a Security is surrendered for conversion after the close of
business on any regular record date for payment of a Distribution and before the
opening of business on the corresponding Distribution payment date, then,
notwithstanding such conversion, the Distribution payable on such Distribution
payment date will be paid in cash to the person in whose name the Security is
registered at the close of business on such record date, and (other than a
Security or a portion of a Security called for redemption on a redemption date
occurring after such record date and on or prior to such Distribution payment
date) when so surrendered for conversion, the Security must be accompanied by
payment of an amount equal to the Distribution payable on such Distribution
payment date. Except as provided above, neither the Trust nor the Sponsor will
make, or be required to make, any payment, allowance or adjustment upon any
conversion on account of any accumulated and unpaid Distributions accumulated on
the Securities surrendered for conversion, or on account of any accumulated and
unpaid dividends on the shares of Common Stock issued upon such conversion.
Securities shall be deemed to have been converted immediately prior to the close
of business on the day on which a Conversion Request relating to such Securities
is received by the Trust in accordance with the foregoing provision (the
"Conversion Date"). The Person or Persons entitled to receive Common Stock
issuable upon conversion of the Debentures shall be treated for all purposes as
the record holder or holders of such Common Stock at such time. As promptly as
practicable on or after the Conversion Date, the Sponsor shall issue and deliver
at the office of the Conversion Agent a certificate or certificates for the
number of full shares of Common Stock issuable upon such conversion, together
with the cash payment, if any, in lieu of any fraction of any share to the
Person or Persons entitled to receive the same, unless otherwise directed by the
Holder in the Conversion Request and the Conversion Agent shall distribute such
certificate or certificates, together with the applicable cash payment, if any,
to such Person or Persons.
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(b) Each Holder of a Security by his acceptance thereof appoints The
First National Bank of Chicago "Conversion Agent" for the purpose of effecting
the conversion of Securities in accordance with this Section. In effecting the
conversion and transactions described in this Section, the Conversion Agent
shall be acting as agent of the Holders of Securities directing it to effect
such conversion transactions. The Conversion Agent is hereby authorized (i) to
exchange Securities from time to time for Debentures held by the Trust in
connection with the conversion of such Securities in accordance with this
section and (ii) to convert all or a portion of the Debentures into Common Stock
and thereupon to deliver such shares of Common Stock in accordance with the
provisions of this section and to deliver to the Trust a new Debenture or
Debentures for any resulting unconverted principal amount.
(c) No fractional shares of Common Stock will be issued as a result of
conversion, but in lieu thereof, such fractional interest will be paid in cash
by the Company to the Conversion Agent, which in turn will make such payment to
the Holder or Holders of Securities so converted.
(d) The Sponsor shall at all times reserve and keep available out of
its authorized and unissued Common Stock, solely for issuance upon the
conversion of the Debentures, free from any preemptive or other similar rights,
such number of shares of Common Stock as shall from time to time be issuable
upon the conversion of all the Debentures then outstanding. Notwithstanding the
foregoing, shall be entitled to deliver upon conversion of Debentures, shares of
Common Stock reacquired and held in the treasury of the Sponsor (in lieu of the
issuance of authorized and unissued shares of Common Stock), so long as any such
treasury shares are free and clear of all liens, charges, security interests or
encumbrances. Any shares of Common Stock issued upon conversion of the
Debentures shall be duly authorized, validly issued and fully paid and
nonassessable. The Trust shall deliver the shares of Common Stock received upon
conversion of the Debentures to the converting Holder free and clear of all
liens, charges, security interests and encumbrances, except for United States
withholding taxes. Each of the Sponsor and the Trust shall prepare and shall use
its best efforts to obtain and keep in force such governmental or regulatory
permits or other authorizations as may be required by law, and shall comply with
all applicable requirements as to registration or qualification of Common Stock
(and all requirements to list Common Stock issuable upon conversion of
Debentures that are at the time applicable), in order to enable the company to
lawfully issue Common Stock to the Trust upon conversion of the Debentures and
the Trust to lawfully deliver Common Stock to each Holder upon conversion of the
Securities.
(e) The Sponsor will pay any and all taxes that may be payable in
respect of the issue or delivery of shares of Common Stock on conversion of
Debentures and the delivery of the shares of Common Stock by the Trust upon
conversion of the Securities. The Sponsor shall not, however, be required to pay
any tax which may be
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<PAGE>
payable in respect of any transfer involved in the issue and delivery of shares
of Common Stock in a name other than that in which the Securities so converted
were registered, and no such issue or delivery shall be made unless and until
the person requesting such issue has paid to the Trust the amount of any such
tax, or has established to the satisfaction of the Trust that such tax has been
paid.
(f) Nothing in the preceding Paragraph (e) shall limit the requirement
of the Trust to withhold taxes pursuant to the terms of the Securities or set
forth in this Exhibit C to the Declaration or to the Declaration itself or
otherwise require the Property Trustee or the Trust to pay any amounts on
account of such withholdings.
6. VOTING RIGHTS. (a) Except as provided under paragraph 5(b) below and
as otherwise required by law and the Declaration, the Holders of the Common
Securities will have no voting rights.
(b) Holders of Common Securities have the sole right under the
Declaration to increase or decrease the number of Trustees, and to appoint,
remove or replace a Trustee, any such increase, decrease, appointment, removal
or replacement to be approved by Holders of Common Securities representing a
Majority in liquidation amount of the Common Securities.
If any proposed amendment to the Declaration provides for, or the
Regular Trustees otherwise propose to effect, (i) any action that would
adversely affect the powers, preferences or special rights of the Securities,
whether by way of amendment to the Declaration or otherwise, or (ii) the
dissolution, winding-up or termination of the Trust, other than in connection
with the distribution of Debentures held by the Property Trustee, upon the
occurrence of a Special Event or in connection with the redemption of Common
Securities as a consequence of a redemption of Debentures, then the Holders of
outstanding Securities will be entitled to vote on such amendment or proposal as
a class and such amendment or proposal shall not be effective except with the
approval of the Holders of Securities representing a Majority in liquidation
amount of such Securities; provided, however, that (A) if any amendment or
proposal referred to in clause (i) above would adversely affect only the
Preferred Securities or the Common Securities, then only the affected class will
be entitled to vote on such amendment or proposal and such amendment or proposal
shall not be effective except with the approval of a Majority in liquidation
amount of such class of Securities, (B) the rights of Holders of Common
Securities under Article 4.02 of the Declaration to increase or decrease the
number of, and to appoint, replace or remove, Trustees shall not be amended
without the consent of each Holder of Common Securities, and (C) amendments to
the Declaration shall be subject to such further requirements as are set forth
in Sections 12.01 and 12.02 of the Declaration.
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In the event the consent of the Property Trustee as the holder of the
Debentures, is required under the Indenture with respect to any amendment,
modification or termination of the Indenture or the Debentures, the Property
Trustee shall request the written direction of the Holders of the Securities
with respect to such amendment, modification or termination. The Property
Trustee shall vote with respect to such amendment, modification or termination
as directed by a Majority in liquidation amount of the Securities voting
together as a single class; provided that where such amendment, modification or
termination of the Indenture requires the consent or vote of (1) holders of
Debentures representing a specified percentage greater than a majority in
principal amount of the Debentures or (2) each holder of Debentures, the
Property Trustee may only vote with respect to that amendment, modification or
termination as directed by, in the case of clause (1) above, the vote of Holders
of Securities representing such specified percentage of the aggregate
liquidation amount of the Securities, or, in the case of clause (2) above, each
Holder of Securities; and provided, further, that the Property Trustee shall be
under no obligation to take any action in accordance with the directions of the
Holders of the Securities unless the Property Trustee shall have received, at
the expense of the Sponsor, an opinion of nationally recognized independent tax
counsel recognized as an expert in such matters to the effect that the Trust
will not be classified for United States federal income tax purposes as an
association taxable as a corporation or a partnership on account of such action
and will be treated as a grantor trust for United States federal income tax
purposes following such action.
Subject to Section 2.06 of the Declaration, and the provisions of this
and the next succeeding paragraph, the Holders of a Majority in liquidation
amount of the Common Securities, voting separately as a class shall have the
right to (A) on behalf of all Holders of Common Securities, waive any past
default that is waivable under the Declaration (subject to, and in accordance
with the Declaration) and (B) direct the time, method, and place of conducting
any proceeding for any remedy available to the Property Trustee, or exercising
any trust or power conferred upon the Property Trustee under the Declaration,
including the right to direct the Property Trustee, as holder of the Debentures,
to (i) direct the time, method and place of conducting any proceeding for any
remedy available to the Debenture Trustee, or exercising any trust or power
conferred on the Debenture Trustee with respect to the Debentures, (ii) waive
any past default and its consequences that is waivable under Section 6.06 of the
Indenture, or (iii) exercise any right to rescind or annul a declaration that
the principal of all the Debentures shall be due and payable; provided that
where the taking of any action under the Indenture requires the consent or vote
of (1) holders of Debentures representing a specified percentage greater than a
majority in principal amount of the Debentures or (e) each holder of Debentures,
the Property Trustee may only take such action if directed by, in the case of
clause (1) above, the vote of Holders of Common Securities representing such
specified percentage of the aggregate liquidation amount of the Common
Securities, or, in the case of clause (2) above, each Holder of Common
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Securities. Pursuant to this paragraph, the Property Trustee shall not revoke,
or take any action inconsistent with, any action previously authorized or
approved by a vote of the Holders of the Preferred Securities, and shall not
take any action in accordance with the direction of the Holders of the Common
Securities under this paragraph if the action is prejudicial to the Holders of
Preferred Securities. Other than with respect to directing the time, method and
place of conducting any proceeding for any remedy available to the Property
Trustee or the Debenture Trustee as set forth above, the Property Trustee shall
be under no obligation to take any of the foregoing actions at the direction of
the Holders of Common Securities unless the Properties Trustee shall have
received, at the expense of the Sponsor, an opinion of nationally recognized
independent tax counsel recognized as expert in such matters to the effect that
the Trust will not be classified for United States federal income tax purposes
as an association taxable as a corporation or a partnership on account of such
action and will be treated as a grantor trust for United States income tax
purposes following such action.
Notwithstanding any other provision of these terms, each Holder of
Common Securities will be deemed to have waived any Event of Default with
respect to the Common Securities and its consequences until all Events of
Default with respect to the Preferred Securities have been cured, waived by the
Holders of Preferred Securities as provided in the Declaration or otherwise
eliminated, and until all Events of Default with respect to the Preferred
Securities have been so cured, waived by the Holders of Preferred Securities or
otherwise eliminated, the Property Trustee will be deemed to be acting solely on
behalf of the Holders of Preferred Securities and only the Holders of the
Preferred Securities will have the right to direct the Property Trustee in
accordance with the terms of the Declaration or of the Securities. In the event
that any Event of Default with respect to the Preferred Securities is waived by
the Holders of Preferred Securities as provided in the Declaration, the Holders
of Common Securities agree that such waiver shall also constitute the waiver of
such Event of Default with respect to the Common Securities for all purposes
under the Declaration without any further act, vote or consent of the Holders of
the Common Securities.
A waiver of an Indenture Event of Default by the Property Trustee at
the direction of the Holders of the Preferred Securities will constitute a
waiver of the corresponding Event of Default under the Declaration in respect of
the Securities.
Any required approval of Holders of Common Securities may be given at a
separate meeting of Holders of Common Securities convened for such purpose, at a
meeting of all of the Holders of Securities of the Trust or pursuant to written
consent. The Regular Trustees will cause a notice of any meeting at which
Holders of Common Securities are entitled to vote, or of any matter upon which
action by written consent of such Holders is to be taken, to be mailed to each
Holder of record of Common Securities. Each such notice will include a statement
setting forth (i) the date of such
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meeting or the date by which such action is to be taken, (ii) a description of
any resolution proposed for adoption at such meeting on which such Holders are
entitled to vote or of such matter upon which written consent is sought and
(iii) instructions for the delivery of proxies or consents.
No vote or consent of the Holders of Common Securities will be required
for the Trust to redeem and cancel Common Securities in accordance with the
Declaration.
7. PRO RATA TREATMENT. A reference in these terms of the Common
Securities to any payment, distribution or treatment as being "Pro Rata" shall
mean pro rata to each Holder of Securities according to the aggregate
liquidation amount of the Securities held by the relevant Holder in relation to
the aggregate liquidation amount of all Securities outstanding unless, in
relation to a payment, an Event of Default has occurred and is continuing, in
which case any funds available to make such payment shall be paid first to each
Holder of the Preferred Securities pro rata according to the aggregate
liquidation amount of Preferred Securities held by the relevant Holder relative
to the aggregate liquidation amount of all Preferred Securities outstanding, and
only after satisfaction of all amounts owed to the Holders of the Preferred
Securities, to each Holder of Common Securities pro rata according to the
aggregate liquidation amount of Common Securities held by the relevant Holder
relative to the aggregate liquidation amount of all Common Securities
outstanding.
8. RANKING. The Common Securities rank pari passu and payment thereon
will be made Pro Rata with the Preferred Securities except that where an Event
of Default occurs and is continuing, the rights of Holders of Common Securities
to payment in respect of Distributions and payments upon liquidation, redemption
or otherwise are subordinate to the rights of Holders of the Preferred
Securities.
9. MERGERS, CONSOLIDATIONS OR AMALGAMATIONS. The Trust may not
consolidate, amalgamate, merge with or into, or be replaced by, or convey,
transfer or lease its properties and assets to, any corporation or other body.
10. TRANSFERS, EXCHANGES, METHOD OF PAYMENTS. Payment of Distributions
and payments on redemption of the Common Securities will be payable, the
transfer of the Common Securities will be registrable, and Common Securities
will be exchangeable for Common Securities of other denominations of a like
aggregate liquidation amount, at the principal corporate trust office of the
Property Trustee in The City of New York; provided that payment of Distributions
may be made at the option of the Regular Trustees on behalf of the Trust by
check mailed to the address of the persons entitled thereto and that the payment
on redemption of any Common Security will be made only upon surrender of such
Common Security to the Property Trustee. Notwithstanding the foregoing,
transfers of Common Securities are subject to conditions set forth in Section
9.01(c) of the Declaration.
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11. ACCEPTANCE OF INDENTURE. Each Holder of Common Securities, by the
acceptance thereof, agrees to the provisions of the Indenture and the
Debentures, including the subordination provisions thereof.
12. NO PREEMPTIVE RIGHTS. The Holders of Common Securities shall have
no preemptive rights to subscribe to any additional Common Securities or
Preferred Securities.
13. MISCELLANEOUS. These terms shall constitute a part of the
Declaration. The Trust will provide a copy of the Declaration and the Indenture
to a Holder without charge on written request to the Trust at its principal
place of business.
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Annex I
FORM OF COMMON SECURITY CERTIFICATE
TRANSFER OF THIS CERTIFICATE
IS SUBJECT TO THE CONDITIONS
SET FORTH IN THE DECLARATION
REFERRED TO BELOW
Certificate Number Number of Common Securities
------ ----------
Certificate Evidencing Common Securities
of
AES Trust II
$2.75 Common Trust Securities
(liquidation amount $50 per Common Security)
THE SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE
U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD UNLESS SUCH OFFER
AND SALE ARE REGISTERED UNDER OR ARE EXEMPT FROM REGISTRATION
UNDER THE SECURITIES ACT. THE TRANSFER OF THE SECURITY EVIDENCED
HEREBY IS ALSO SUBJECT TO THE RESTRICTIONS SET FORTH IN THE
DECLARATION REFERRED TO BELOW.
AES Trust II, a statutory business trust formed under the laws of the
State of Delaware (the "Trust"), hereby certifies that The AES Corporation (the
"Holder") is the registered owner of ____________________________ (_________)
common securities of the Trust representing undivided beneficial interests in
the assets of the Trust designated the "$2.75 Common Trust Securities"
(liquidation amount $50 per security) (the "Common Securities"). The Common
Securities are transferable on the books and records of the Trust, in person or
by a duly authorized attorney, upon surrender of this certificate duly endorsed
and in proper form for transfer and
<PAGE>
satisfaction of the other conditions set forth in the Declaration (as defined
below) including, without limitation Section 9.01(c) thereof. The designations,
rights, privileges, restrictions, preferences and other terms and provisions of
the Common Securities are set forth in, and this certificate and the Common
Securities represented hereby are issued and shall in all respects be subject to
the terms and provisions of, the Amended and Restated Declaration of Trust of
the Trust dated as of October 29, 1997, as the same may be amended from time to
time (the "Declaration") including the designation of the terms of Common
Securities as set forth in Exhibit C thereto. The Common Securities and the
Preferred Securities issued by the Trust pursuant to the Declaration represent
undivided beneficial interests in the assets of the Trust, including the
Debentures (as defined in the Declaration) issued by The AES Corporation, a
Delaware corporation, to the Trust pursuant to the Indenture referred to in the
Declaration. The Trust will furnish a copy of the Declaration and the Indenture
to the Holder without charge upon written request to the Trust at its principal
place of business or registered office.
The Holder of this Certificate, by accepting this Certificate, is
deemed to have agreed to the terms of the Indenture and the Debentures,
including that the Debentures are subordinate and junior in right of payment to
all Senior Debt (as defined in the Indenture) as and to the extent provided in
the Indenture.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
2
<PAGE>
IN WITNESS WHEREOF, the Trustees of the Trust have executed this
certificate this twenty-ninth day of October, 1997.
AES TRUST II
By________________________, as Trustee
Name:
Title: Trustee
By_________________________, as Trustee
Name:
Title: Trustee
Dated:
Countersigned and Registered:
Transfer Agent and Registrar
By:___________________________
Authorized Signature
<PAGE>
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Common Security will be fixed at a rate
per annum of $2.75 per Common Security, such rate being the rate of interest
payable on the Debentures to be held by the Property Trustee. Distributions in
arrears for more than one quarter will bear interest thereon at the rate per
annum of 5.50% thereof (to the extent permitted by law) compounded monthly. The
term "Distributions" as used herein means such cash distributions and any such
interest payable unless otherwise stated. A Distribution is payable only to the
extent that payments are made in respect of the Debentures held by the Property
Trustee. The amount of Distributions payable for any period will be computed on
the basis of a 360-day year of twelve 30-day months.
Except as otherwise described below, distributions on the Common
Securities will be cumulative, will accrue from October 29, 1997 and will be
payable quarterly in arrears, on the last day of each quarter, commencing on
December 31, 1997, but only if and to the extent that interest payments are made
in respect of the Debentures held by the Property Trustee. So long as AES shall
not be in default in the payment of interest on the Debentures, AES has the
right under the Indenture for the Debentures to defer payments of interest by
extending the interest payment period from time to time on the Debentures for a
period not exceeding 20 consecutive quarters (each an "Extension Period") and,
as a consequence, quarterly Distributions will continue to accrue with interest
thereon (to the extent permitted by applicable law) at the rate of 5.50% per
annum, compounded quarterly during such Extension period; provided that no
Extension Period shall last beyond the date of maturity or any redemption date
of the Debentures. Prior to the termination of any such Extension Period, AES
may commence a new Extension Period; provided that such Extension Period
together with all such previous and further extensions thereof may not exceed 20
consecutive quarterly interest periods. Payments of accrued Distributions will
be payable to Holders as they appear on the books and records of the Trust on
the first record date after the end of the Extension Period. Upon the
termination of any Extension Period and the payment of all amounts then due, AES
may commence a new Extension Period, subject to the above requirements.
The Common Securities shall be redeemable as provided in the
Declaration.
The Common Securities shall be convertible into shares of Common Stock,
through (i) the exchange of Common Securities for a portion of the Debentures
and (ii) the immediate conversion of such Debentures into Common Stock, in the
manner and according to the terms set forth in the Declaration.
4
<PAGE>
CONVERSION REQUEST
To: The First National Bank of Chicago
as Property Trustee of AES Trust II
The undersigned owner of these Common Securities hereby irrevocably
exercises the option to convert these Common Securities, or the portion below
designated, into Common Stock of The AES Corporation (the "Common Stock") in
accordance with the terms of the Amended and Restated Declaration of Trust dated
as of October 29, 1997 (as amended from time to time, the "Declaration"), by
William R. Luraschi, Barry J. Sharp and Willard Hoagland, as Regular Trustees,
First Chicago Delaware Inc., as Delaware Trustee, The First National Bank of
Chicago, as Property Trustee, The AES Corporation, as Sponsor, and by the
Holders, from time to time, of undivided beneficial interests in the assets of
the Trust to be issued pursuant to the Declaration. Pursuant to the
aforementioned exercise of the option to convert these Common Securities, the
undersigned hereby directs the Conversion Agent (as that term is defined in the
Declaration) to (i) exchange such Common Securities for a portion of the
Debentures (as that term is defined in the Declaration) held by the Trust (at
the rate of exchange specified in the terms of the Common Securities set forth
as Exhibit C to the Declaration) and (ii) immediately convert such Debentures on
behalf of the undersigned, into Common Stock (at the conversion rate specified
in the terms of the Common Securities set forth as Exhibit C to the
Declaration).
The undersigned does also hereby direct the Conversion Agent that the
shares issuable and deliverable upon conversion, together with any check in
payment for fractional shares, be issued in the name of and delivered to the
undersigned, unless a different name has been indicated in the assignment below.
If shares are to be issued in the name of a person other than the undersigned,
the undersigned will pay all transfer taxes payable with respect thereto.
5
<PAGE>
Date: _____________, _____
in whole ___in part ___
Number of Common Securities to be
converted: _______________
If a name or names other than the
undersigned, please indicate in
the spaces below the name or
names in which the shares of
Common Stock are to be issued,
along with the address or
addresses of such person or
persons
---------------------------------
---------------------------------
---------------------------------
---------------------------------
---------------------------------
---------------------------------
---------------------------------
Signature (for conversion only)
Please Print or Typewrite Name
and Address, Including Zip Code,
and Social Security or Other
Identifying Number
- -----------------------------------
- -----------------------------------
- -----------------------------------
Signature Guarantee:*____________
- -------------------
1(Signature must be guaranteed by an "eligible guarantor institution" that is, a
bank, stockbroker, savings and loan association or credit union meeting the
requirements of the Conversion Agent, which requirements include membership or
participation in the Securities Transfer Agents Medallion Program ("STAMP")
6
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Common Security
Certificate to:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Insert assignee's social security or tax identification number)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Insert address and zip code of assignee)
and irrevocably appoints
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
_____________________________________________________ agent to transfer this
Common Security Certificate on the books of the Trust. The agent may substitute
another to act for him or her.
Date: ________________________
Signature: _________________________________
(Sign exactly as your name appears on the other side of this Common Security
Certificate)
- -------------------
or such other"signature guarantee program" as may be determined by the
Conversion Agent in addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as amended.)
7
<PAGE>
Signature Guarantee*:__________________________________________
[FORM OF ASSIGNMENT FOR SECURITY OR
COMMON STOCK ISSUABLE UPON CONVERSION THEREOF]
For value received ___________________ hereby sell(s), assign(s)
and transfer(s) unto__________________________________
(Please insert social security or other
taxpayer identification number of assignee.)
the within security and hereby irrevocably constitutes and appoints
______________ attorney to transfer the said security on the books of the
Company, with full power of substitution in the premises.
In connection with any transfer of the within security occurring prior to the
Transfer Restriction Termination Date, the undersigned confirms that such
Security is being transferred:
[ ] To The AES Corporation or a subsidiary thereof; or
[ ] Pursuant to and in compliance with Rule 144A under the Securities
Act of 1933, as amended; or
[ ] To an Institutional Accredited Investor pursuant to and in
compliance with the Securities Act of 1933, as amended; or
[ ] Pursuant to and in compliance with Regulation S under the
Securities Act of 1933, as amended; or
[ ] Pursuant to and in compliance with Rule 144 under the Securities
Act of 1933, as amended;
- -------------------
1(Signature must be guaranteed by an "eligible guarantor institution" that is, a
bank, stockbroker, savings and loan association or credit union meeting the
requirements of the Registrar, which requirements include membership or
participation in the Securities Transfer Agents Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Registrar
in addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.)
8
<PAGE>
and unless the box below is checked, the undersigned confirms
that such security is not being transferred to an "affiliate"
of the Company as defined in Rule 144 under the Securities Act
of 1933, as amended (an "Affiliate"):
[ ] The transferee is an Affiliate of the Company.
Dated:
--------------------------
--------------------------
--------------------------
Signature(s)
Signature(s) must be guaranteed by a
commercial bank or trust company or
a member firm of a major stock
exchange.
---------------------------------
Signature Guarantee
NOTICE: The above signatures of the holder(s) hereof must correspond with the
name as written upon the face of this Security in every particular without
alteration or enlargement or any change whatever.
9
================================================================================
THE AES CORPORATION
GUARANTEE AGREEMENT
----------------
Dated as of October 29, 1997
----------------
================================================================================
<PAGE>
TABLE OF CONTENTS
-------------
PAGE
----
ARTICLE 1
- ---------
DEFINITIONS
-----------
SECTION 1.01. Definitions...............................................2
ARTICLE 2
- ---------
TRUST INDENTURE ACT
-------------------
SECTION 2.01. Trust Indenture Act; Application..........................5
SECTION 2.02. Lists of Holders of Preferred Securities..................5
SECTION 2.03. Reports by the Guarantee Trust............................5
SECTION 2.04. Periodic Reports to Guarantee Trust.......................5
SECTION 2.05. Evidence of Compliance with Conditions Precedent..........6
SECTION 2.06. Events of Default; Waiver.................................6
SECTION 2.07. Disclosure of Information.................................6
SECTION 2.08. Conflicting Interest......................................6
ARTICLE 3
- ---------
POWERS, DUTIES AND RIGHTS OF GUARANTEE TRUSTEE
----------------------------------------------
SECTION 3.01. Powers and Duties of the Guarantee Trustee................7
SECTION 3.02. Certain Rights and Duties of the Guarantee Trustee........8
SECTION 3.03. Not Responsible for Recitals or Issuance of Guarantee....10
ARTICLE 4
- ---------
GUARANTEE TRUSTEE
-----------------
SECTION 4.01. Qualifications...........................................10
SECTION 4.02. Appointment, Removal and Resignation of Guarantee
Trustee...........................................................11
ARTICLE 5
- ---------
GUARANTEE
---------
SECTION 5.01. Guarantee................................................12
SECTION 5.02. Waiver of Notice.........................................12
SECTION 5.03. Obligations Not Affected.................................12
SECTION 5.04. Enforcement of Guarantee.................................13
SECTION 5.05. Guarantee of Payment.....................................14
SECTION 5.06. Subrogation..............................................14
SECTION 5.07. Independent Obligations..................................14
ARTICLE 6
- ---------
LIMITATION OF TRANSACTIONS; SUBORDINATION
------------------------------------------
i
<PAGE>
SECTION 6.01. Limitation of Transactions...............................14
SECTION 6.02. Subordination............................................15
ARTICLE 7
- ---------
TERMINATION
-----------
SECTION 7.01. Termination..............................................15
ARTICLE 8
- ---------
LIMITATION OF LIABILITY; INDEMNIFICATION
----------------------------------------
SECTION 8.01. Exculpation..............................................16
SECTION 8.02. Indemnification..........................................16
ARTICLE 9
- ---------
MISCELLANEOUS
-------------
SECTION 9.01. Successors and Assigns...................................17
SECTION 9.02. Amendments...............................................17
SECTION 9.03. Notices..................................................17
SECTION 9.04. Genders..................................................18
SECTION 9.05. Benefit..................................................18
SECTION 9.06. Governing Law............................................18
SECTION 9.07. Counterparts.............................................18
SECTION 9.08. Exercise of Overallotment Option.........................18
ii
<PAGE>
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT AS SET
FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF,
THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT), (B) IT IS AN INSTITUTIONAL "ACCREDITED
INVESTOR" IN RULE 501(a)(1), (2), (3) OR (7) UNDER THE
SECURITIES ACT (AN "INSTITUTIONAL ACCREDITED INVESTOR")), OR
(C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN
AN OFFSHORE TRANSACTION (2) AGREES THAT IT WILL NOT PRIOR TO
THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF
THE SECURITY EVIDENCED HEREBY UNDER RULE 144(k) UNDER THE
SECURITIES ACT (OR ANY SUCCESSOR PROVISION), RESELL OR
OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO AES OR ANY
SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A
QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A
UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN
INSTITUTIONAL ACCREDITED INVESTOR THAT, BEFORE SUCH TRANSFER
FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON
TRANSFER OF THIS SECURITY (THE FORM OF WHICH LETTER CAN BE
OBTAINED FROM THE TRUSTEE) AND IF SUCH TRANSFER IS IN RESPECT
OF AN AGGREGATE PRINCIPAL AMOUNT OF SECURITIES LESS THAN
$250,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE TRUST THAT
SUCH TRANSFER IS IN
<PAGE>
COMPLIANCE WITH THE SECURITIES ACT, (D) OUTSIDE THE UNITED
STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904
UNDER THE SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF
AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND (3) AGREES THAT IT WILL
DELIVER TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A
NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IF THE
PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR,
THE TRANSFEROR MUST, BEFORE SUCH TRANSFER, FURNISH TO THE
ISSUER SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER
INFORMATION AS IT MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH
TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION", "UNITED STATES" AND "U.S. PERSON" HAVE THE
MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES
ACT.
GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT, dated as of October 29, 1997, is executed and
delivered by The AES Corporation, a Delaware corporation (the "Guarantor"), and
The First National Bank of Chicago, a national banking association, as the
initial Guarantee Trustee (as defined herein) for the benefit of
<PAGE>
the Holders (as defined herein) from time to time of the Preferred Securities
(as defined herein) of AES Trust II, a Delaware statutory business trust (the
"Issuer").
WHEREAS, pursuant to an Amended and Restated Declaration of Trust (the
"Declaration"), dated as of October 29, 1997 among the trustees of the Issuer
named therein, The AES Corporation, as Sponsor, and the Holders from time to
time of undivided beneficial interests in the assets of the Issuer, the Issuer
may issue up to $345,000,000 aggregate liquidation amount of its $2.75 Term
Convertible Securities, Series B (the "Preferred Securities") representing
undivided beneficial interests in the assets of the Issuer and having the terms
set forth in Exhibit B to the Declaration, of which $300,000,000 liquidation
amount of Preferred Securities are being issued as of the date hereof. Up to the
remaining $45,000,000 liquidation amount of Preferred Securities may be issued
by the Issuer if and to the extent that the over-allotment option granted by the
Guarantor and the Issuer pursuant to the Purchase Agreement (as defined in the
Declaration) is exercised by the Initial Purchasers named in the Purchase
Agreement.
WHEREAS, as incentive for the Holders to purchase Preferred Securities,
the Guarantor desires to irrevocably and unconditionally agree, to the extent
set forth herein, to pay to the Holders of the Preferred Securities the
Guarantee Payments (as defined herein) and to make certain other payments on the
terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the purchase by the initial
purchasers thereof of Preferred Securities, which purchase the Guarantor hereby
agrees shall benefit the Guarantor, the Guarantor executes and delivers this
Guarantee Agreement for the benefit of the Holders from time to time of the
Preferred Securities.
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions. (a) Capitalized terms used in this Guarantee
Agreement but not defined in the preamble above have the respective meanings
assigned to them in this Section 1.01;
(b) a term defined anywhere in this Guarantee Agreement has the same
meaning throughout;
2
<PAGE>
(c) all references to "the Guarantee Agreement" or "this Guarantee
Agreement" are to this Guarantee Agreement as modified, supplemented or amended
from time to time;
(d) all references in this Guarantee Agreement to Articles and Sections
are to Articles and Sections of this Guarantee Agreement unless otherwise
specified;
(e) a term defined in the Trust Indenture Act has the same meaning when
used in this Guarantee Agreement unless otherwise defined in this Guarantee
Agreement or unless the context otherwise requires; and
(f) a reference to the singular includes the plural and vice versa.
"Affiliate" has the same meaning as given to that term in Rule 405 of
the Securities Act of 1933, as amended, or any successor rule thereunder.
"Commission" means the Securities and Exchange Commission.
"Common Securities" means the securities representing undivided
beneficial interests in the assets of the Issuer, having the terms set forth in
Exhibit C to the Declaration.
"Common Stock" means the common stock of the Guarantor, par value $.01
per share.
"Covered Person" means any Holder of Preferred Securities.
"Debentures" means the series of Junior Subordinated Debentures issued
by the Guarantor under the Indenture to the Property Trustee and entitled the
"5.50% Junior Subordinated Convertible Debentures due 2012".
"Distributions" means the periodic distributions and other payments
payable to Holders of Preferred Securities in accordance with the terms of the
Preferred Securities set forth in Exhibit B to the Declaration.
"Event of Default" means a default by the Guarantor on any of its
payment or other obligations under this Guarantee Agreement.
"Guarantee Payments" shall mean the following payments or
distributions, without duplication, with respect to the Preferred Securities, to
the extent not paid or made by the Issuer: (i) any accrued and unpaid
Distributions and the redemption price, including all accrued and unpaid
Distributions to the date of
3
<PAGE>
redemption (the "Redemption Price"), with respect to the Preferred Securities
called for redemption by the Issuer but only if and to the extent that in each
case the Guarantor has made a payment to the Property Trustee of interest or
principal on the Debentures and (ii) upon a voluntary or involuntary
dissolution, winding-up or termination of the Issuer (other than in connection
with the distribution of Debentures to Holders or the redemption of all the
Preferred Securities upon the maturity or redemption of the Debentures as
provided in the Declaration), the lesser of (a) the aggregate of the liquidation
amount and all accrued and unpaid Distributions on the Preferred Securities to
the date of payment, to the extent the Issuer has funds available therefor, or
(b) the amount of assets of the Issuer remaining available for distribution to
Holders in liquidation of the Issuer (in either case, the "Liquidation
Distribution").
"Guarantee Trustee" means The First National Bank of Chicago, a
national banking association, until a Successor Guarantee Trustee has been
appointed and accepted such appointment pursuant to the terms of this Guarantee
Agreement and thereafter means each such Successor Guarantee Trustee.
"Holder" shall mean any holder, as registered on the books and records
of the Issuer, of any Preferred Securities; provided, however, that in
determining whether the holders of the requisite percentage of Preferred
Securities have given any request, notice, consent or waiver hereunder, "Holder"
shall not include the Guarantor or any entity directly or indirectly controlling
or controlled by or under direct or indirect common control with the Guarantor.
"Indemnified Person" means the Guarantee Trustee, any Affiliate of the
Guarantee Trustee, and any officers, directors, shareholders, members, partners,
employees, representatives or agents of the Guarantee Trustee.
"Indenture" means the Junior Subordinated Indenture dated as of March
1, 1997 between the Guarantor and The First National Bank of Chicago, as
trustee, as supplemented by the Second Supplemental Indenture thereto dated as
of October 29, 1997, pursuant to which the Debentures are to be issued.
"Majority in liquidation amount of the Preferred Securities" means,
except as otherwise required by the Trust Indenture Act, Holder(s) of
outstanding Preferred Securities voting together as a single class, who are the
record owners of Preferred Securities whose liquidation amount (including the
stated amount that would be paid on redemption, liquidation or otherwise, plus
accrued and unpaid Distributions to the date upon which the voting percentages
are determined) represents more than 50% of the liquidation amount of all
outstanding Preferred Securities.
4
<PAGE>
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever nature.
"Preferred Securities" has the meaning set forth in the first WHEREAS
clause above.
"Property Trustee" means the Person acting as Property Trustee under
the Declaration.
"Redemption Price" has the meaning set forth in the definition of
"Guarantee Payments."
"Responsible Officer" means, with respect to the Guarantee Trustee, the
chairman of the board of directors, the president, any vice-president, any
assistant vice-president, the secretary, any assistant secretary, the treasurer,
any assistant treasurer, any trust officer or assistant trust officer or any
other officer of the Guarantee Trustee customarily performing functions similar
to those performed by any of the above designated officers and also means, with
respect to a particular corporate trust matter, any other officer to whom such
matter is referred because of that officer's knowledge of and familiarity with
the particular subject.
"Successor Guarantee Trustee" means a successor Guarantee Trustee
possessing the qualifications to act as a Guarantee Trustee under Section
4.01(a).
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended.
ARTICLE 2
TRUST INDENTURE ACT
SECTION 2.01. Trust Indenture Act; Application. (a) This Guarantee
Agreement is subject to the provisions of the Trust Indenture Act that are
required to be part of this Guarantee Agreement and shall, to the extent
applicable, be governed by such provisions;
(b) if and to the extent that any provision of this Guarantee Agreement
limits, qualifies or conflicts with the duties imposed by ss.ss. 310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall control; and
5
<PAGE>
(c) the application of the Trust Indenture Act to this Guarantee
Agreement shall not affect the nature of the Preferred Securities as equity
securities representing undivided beneficial interests in the assets of the
Issuer.
SECTION 2.02. Lists of Holders of Preferred Securities. (a) The
Guarantor shall provide the Guarantee Trustee with such information as is
required under ss. 312(a) of the Trust Indenture Act at the times and in the
manner provided in ss. 312(a); and
(b) the Guarantee Trustee shall comply with its obligations under
ss.ss. 310(b), 311 and 312(b) of the Trust Indenture Act.
SECTION 2.03. Reports by the Guarantee Trust. Within 60 days after May
15 of each year, commencing May 1998 the Guarantee Trustee shall provide to the
Holders of the Preferred Securities such reports as are required by ss. 313 of
the Trust Indenture Act, if any, in the form, in the manner and at the times
provided by ss. 313 of the Trust Indenture Act. The Guarantee Trustee shall also
comply with the requirements of ss. 313(d) of the Trust Indenture Act.
SECTION 2.04. Periodic Reports to Guarantee Trust. The Guarantor shall
provide to the Guarantee Trustee, the Commission and the Holders of the
Preferred Securities, as applicable, such documents, reports and information as
required by ss. 314(a)(1)-(3) (if any) of the Trust Indenture Act and the
compliance certificates required by ss. 314(a)(4) and (c) of the Trust Indenture
Act, any such certificates to be provided in the form, in the manner and at the
times required by ss. 314(a)(4) and (c) of the Trust Indenture Act (provided
that any certificate to be provided pursuant to ss. 314(a)(4) of the Trust
Indenture Act shall be provided within 120 days of the end of each fiscal year
of the Issuer).
SECTION 2.05. Evidence of Compliance with Conditions Precedent. The
Guarantor shall provide to the Guarantee Trustee such evidence of compliance
with any conditions precedent, if any, provided for in this Guarantee Agreement
which relate to any of the matters set forth in ss. 314(c) of the Trust
Indenture Act. Any certificate or opinion required to be given pursuant to ss.
314(c) shall comply with ss. 314(e) of the Trust Indenture Act.
SECTION 2.06. Events of Default; Waiver. (a) Subject to Section
2.06(b), Holders of Preferred Securities may by vote of at least a Majority in
liquidation amount of the Preferred Securities, (A) direct the time, method and
place of conducting any proceeding for any remedy available to the Guarantee
Trustee, or exercising any trust or power conferred upon by the Guarantee
Trustee or (B) on behalf of the Holders of all Preferred Securities waive any
past Event of Default
6
<PAGE>
and its consequences. Upon such waiver, any such default shall cease to exist,
and any Event of Default arising therefrom shall be deemed to have been cured,
for every purpose of this Guarantee Agreement, but no such waiver shall extend
to any subsequent or other default or Event of Default or impair any right
consequent thereon.
(b) The right of any Holder of Preferred Securities to receive payment
of the Guarantee Payments in accordance with this Guarantee Agreement, or to
institute suit for the enforcement of any such payment, shall not be impaired
without the consent of each such Holder.
SECTION 2.07. Disclosure of Information. The disclosure of information
as to the names and addresses of the Holders of the Preferred Securities in
accordance with ss. 312 of the Trust Indenture Act, regardless of the source
from which such information was derived, shall not be deemed to be a violation
of any existing law, or any law hereafter enacted which does not specifically
refer to ss. 312 of the Trust Indenture Act, nor shall the Guarantee Trustee be
held accountable by reason of mailing any material pursuant to a request made
under ss. 312(b) of the Trust Indenture Act.
SECTION 2.08. Conflicting Interest. The Declaration shall be deemed to
be specifically described in this Guarantee Agreement for the purposes of clause
(i) of the first proviso contained in Section 310(b) of the Trust Indenture Act.
ARTICLE 3
POWERS, DUTIES AND RIGHTS OF GUARANTEE TRUSTEE
SECTION 3.01. Powers and Duties of the Guarantee Trustee. (a) This
Guarantee Agreement shall be held by the Guarantee Trustee in trust for the
benefit of the Holders of the Preferred Securities. The Guarantee Trustee shall
not transfer its right, title and interest in the Guarantee Agreement to any
Person except a Successor Guarantee Trustee on acceptance by such Successor
Guarantee Trustee of its appointment to act as Guarantee Trustee or to a Holder
of Preferred Securities exercising his or her rights pursuant to Section 5.04.
The right, title and interest of the Guarantee Trustee to the Guarantee
Agreement shall vest automatically in each Person who may hereafter be appointed
as Guarantee Trustee in accordance with Article 4. Such vesting and cessation of
title shall be effective whether or not conveyancing documents have been
executed and delivered.
7
<PAGE>
(b) If an Event of Default occurs and is continuing, the Guarantee
Trustee shall enforce this Guarantee Agreement for the benefit of the Holders of
the Preferred Securities.
(c) This Guarantee Agreement and all moneys received by the Property
Trustee hereunder in respect of the Guarantee Payments will not be subject to
any right, charge, security interest, lien or claim of any kind in favor of, or
for the benefit of that Guarantee Trustee or its agents or their creditors.
(d) The Guarantee Trustee shall, within 90 days after the occurrence of
an Event of Default known to the Guarantee Trustee, transmit by mail, first
class postage prepaid, to the holders of the Preferred Securities, as their
names and addresses appear upon the register, notice of all such Events of
Default, unless such defaults shall have been cured before the giving of such
notice; provided, that, the Guarantee Trustee shall be protected in withholding
such notice if and so long as the board of directors, the executive committee,
or a trust committee of directors and/or Responsible Officers, of the Guarantee
Trustee in good faith determine that the withholding of such notice is in the
interests of the Holders of the Preferred Securities. The Guarantee Trustee
shall not be deemed to have knowledge of any default except any default as to
which the Guarantee Trustee shall have received written notice or a Responsible
Officer charged with the administration of this Guarantee Agreement shall have
obtained written notice.
(e) The Guarantee Trustee shall continue to serve as a Trustee unless a
Successor Guarantee Trustee has been appointed and accepted that appointment in
accordance with Article 4.
SECTION 3.02. Certain Rights and Duties of the Guarantee Trustee. (a)
The Guarantee Trustee, before the occurrence of an Event of Default and after
the curing of all Events of Default that may have occurred, shall undertake to
perform only such duties as are specifically set forth in this Guarantee
Agreement, and no implied covenants shall be read into this Guarantee Agreement
against the Guarantee Trustee. In case an Event of Default has occurred (that
has not been cured or waived pursuant to Section 2.06(a)), the Guarantee Trustee
shall exercise such of the rights and powers vested in it by this Guarantee
Agreement, and use the same degree of care and skill in their exercise, as a
prudent person would exercise or use under the circumstances in the conduct of
his or her own affairs.
(b) No provision of this Guarantee Agreement shall be construed to
relieve the Guarantee Trustee from liability for its own negligent action, its
own negligent failure to act or its own willful misconduct, except that:
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(i) prior to the occurrence of an Event of Default and after the curing
or waiving of all such Events of Default that may have occurred:
(A) the duties and obligations of the Guarantee Trustee shall
be determined solely by the express provisions of this
Guarantee Agreement, and the Guarantee Trustee shall not be
liable except for the performance of such duties and
obligations as are specifically set forth in this Guarantee
Agreement, and no implied covenants or obligations shall be
read into this Guarantee Agreement against the Guarantee
Trustee; and
(B) in the absence of bad faith on the part of the Guarantee
Trustee, the Guarantee Trustee may conclusively rely, as to
the truth of the statements and the correctness of the
opinions expressed therein, upon any certificates or opinions
furnished to the Guarantee Trustee and conforming to the
requirements of this Guarantee Agreement; but in the case of
any such certificates or opinions that by any provision hereof
are specifically required to be furnished to the Guarantee
Trustee, the Guarantee Trustee shall be under a duty to
examine the same to determine whether or not they conform to
the requirements of this Guarantee Agreement;
(ii) the Guarantee Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the Guarantee
Trustee, unless it shall be proved that the Guarantee Trustee was
negligent in ascertaining the pertinent facts;
(iii) the Guarantee Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance
with the direction of the Holders of Preferred Securities as provided
herein relating to the time, method and place of conducting any
proceeding for any remedy available to the Guarantee Trustee, or
exercising any trust or power conferred upon the Guarantee Trustee
under this Guarantee Agreement; and
(iv) no provision of this Guarantee Agreement shall require the
Guarantee Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties
or in the exercise of any of its rights or powers, if it shall have
reasonable ground for believing that the repayment of such funds or
liability is not reasonably assured to it under the terms of this
Guarantee Agreement or adequate indemnity against such risk or
liability is not reasonably assured to it.
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(c) Subject to the provisions of Section 3.02(a) and (b):
(i) whenever in the administration of this Guarantee Agreement, the
Guarantee Trustee shall deem it desirable that a matter be proved or
established prior to taking, suffering or omitting any action
hereunder, the Guarantee Trustee (unless other evidence is herein
specifically prescribed) may, in the absence of bad faith on its part,
request and rely upon a certificate, which shall comply with the
provisions of ss. 314(e) of the Trust Indenture Act, signed by any
authorized officer of the Guarantor;
(ii) the Guarantee Trustee (A) may consult with counsel (which may be
counsel to the Guarantor or any of its Affiliates and may include any
of its employees) selected by it in good faith and with due care and
the written advice or opinion of such counsel with respect to legal
matters shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted by it hereunder in
good faith and in reliance thereon and in accordance with such advice
and opinion and (B) shall have the right at any time to seek
instructions concerning the administration of this Guarantee Agreement
from any court of competent jurisdiction;
(iii) the Guarantee Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys and the Guarantee Trustee shall not be
responsible for any misconduct or negligence on the part of any agent
or attorney appointed by it in good faith and with due care;
(iv) the Guarantee Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Guarantee Agreement
at the request or direction of any Holders of Preferred Securities,
unless such Holders shall have offered to the Guarantee Trustee
reasonable security and indemnity against the costs, expenses
(including its attorneys' fees and expenses) and liabilities that
might be incurred by it in complying with such request or direction;
provided that nothing contained in this clause (iv) shall relieve the
Guarantee Trustee of the obligation, upon the occurrence of an Event
of Default (which has not been cured or waived) to exercise such of
the rights and powers vested in it by this Guarantee Agreement, and to
use the same degree of care and skill in this exercise, as a prudent
person would exercise or use under the circumstances in the conduct of
his or her own affairs; and
(v) any action taken by the Guarantee Trustee or its agents hereunder
shall bind the Holders of the Preferred Securities and the signature of
the Guarantee Trustee or its agents alone shall be sufficient and
effective to
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perform any such action; and no third party shall be required to
inquire as to the authority of the Guarantee Trustee to so act, or as
to its compliance with any of the terms and provisions of this
Guarantee Agreement, both of which shall be conclusively evidenced by
the Guarantee Trustee's or its agent's taking such action.
SECTION 3.03. Not Responsible for Recitals or Issuance of Guarantee.
The recitals contained in this Guarantee shall be taken as the statements of the
Guarantor and the Guarantee Trustee does not assume any responsibility for their
correctness. The Guarantee Trustee makes no representations as to the validity
or sufficiency of this Guarantee Agreement.
ARTICLE 4
GUARANTEE TRUSTEE
SECTION 4.01. Qualifications. (a) There shall at all times be a
Guarantee Trustee which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a national banking association or corporation organized and
doing business under the laws of the United States of America
or any State or Territory thereof or of the District of
Columbia, or a corporation or Person permitted by the
Commission to act as an institutional trustee under the Trust
Indenture Act, authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus
of at least $50,000,000, and subject to supervision or
examination by Federal, State, Territorial or District of
Columbia authority. If such corporation publishes reports of
condition at least annually, pursuant to law or to the
requirements of the supervising or examining authority
referred to above, then for the purposes of this section
4.01(a)(ii), the combined capital and surplus of such
corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so
published.
If at any time the Guarantee Trustee shall cease to satisfy the
requirements of clauses (i)-(ii) above, the Guarantee Trustee shall immediately
resign in the manner and with the effect set out in Section 4.02. If the
Guarantee Trustee has or shall acquire any "conflicting interest" within the
meaning of ss. 310(b) of the Trust
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Indenture Act, the Guarantee Trustee and the Guarantor shall in all respects
comply with the provisions of ss. 310(b) of the Trust Indenture Act.
SECTION 4.02. Appointment, Removal and Resignation of Guarantee
Trustee. (a) Subject to Section 4.02(b), the Guarantee Trustee may be appointed
or removed without cause at any time by the Guarantor except following the
occurrence and during the continuation of an Event of Default.
(b) The Guarantee Trustee shall not be removed in accordance with
Section 4.02(a) until a Successor Guarantee Trustee possessing the
qualifications to act as Guarantee Trustee under Section 4.01(a) has been
appointed and has accepted such appointment by written instrument executed by
such Successor Guarantee Trustee and delivered to the Guarantor and the
Guarantee Trustee being removed.
(c) The Guarantee Trustee appointed to office shall hold office until
his successor shall have been appointed or until its removal or resignation.
(d) The Guarantee Trustee may resign from office (without need for
prior or subsequent accounting) by an instrument (a "Resignation Request") in
writing signed by the Guarantee Trustee and delivered to the Guarantor, which
resignation shall take effect upon such delivery or upon such later date as is
specified therein; provided, however, that no such resignation of the Guarantee
Trustee shall be effective until a Successor Guarantee Trustee possessing the
qualifications to act as Guarantee Trustee under Section 4.01(a) has been
appointed and has accepted such appointment by instrument executed by such
Successor Guarantee Trustee and delivered to Guarantor and the resigning
Guarantee Trustee.
(e) If no Successor Guarantee Trustee shall have been appointed and
accepted appointment as provided in this Section 4.02 delivery to the Guarantor
of a Resignation Request, the resigning Guarantee Trustee may petition any court
of competent jurisdiction for appointment of a Successor Guarantee Trustee. Such
court may thereupon after such notice, if any, as it may deem proper and
prescribe, appoint a Successor Guarantee Trustee.
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ARTICLE 5
GUARANTEE
SECTION 5.01. Guarantee. The Guarantor irrevocably and unconditionally
agrees to pay in full to the Holders the Guarantee Payments (without duplication
of amounts theretofore paid by the Issuer) regardless of any defense, right of
set-off or counterclaim which the Issuer may have or assert. The Guarantor's
obligation to make a Guarantee Payment may be satisfied by direct payment of the
required amounts by the Guarantor to the Holders or by causing the Issuer to pay
such amounts to the Holders.
SECTION 5.02. Waiver of Notice. The Guarantor hereby waives notice of
acceptance of this Guarantee Agreement and of any liability to which it applies
or may apply, presentment, demand for payment, any right to require a proceeding
first against the Issuer or any other Person before proceeding against the
Guarantor, protest, notice of nonpayment, notice of dishonor, notice of
redemption and all other notices and demands.
SECTION 5.03. Obligations Not Affected. The obligations, covenants,
agreements and duties of the Guarantor under this Guarantee Agreement shall in
no way be affected or impaired by reason of the happening from time to time of
any of the following:
(a) the release or waiver, by operation of law or otherwise, of
the performance or observance by the Issuer of any express or implied
agreement, covenant, term or condition relating to the Preferred
Securities to be performed or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all or
any portion of the Distributions (other than an extension of time for
payment of Distributions that results from the extension of any
interest payment period on the Debentures), Redemption Price,
Liquidation Distribution (as defined in the Declaration) or any other
sums payable under the terms of the Preferred Securities or the
extension of time for the performance of any other obligation under,
arising out of, or in connection with, the Preferred Securities;
(c) any failure, omission, delay or lack of diligence on the part
of the Holders to enforce, assert or exercise any right, privilege,
power or remedy conferred on the Holders pursuant to the terms of the
Preferred Securities, or any action on the part of the Issuer granting
indulgence or extension of any kind;
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(d) the voluntary or involuntary liquidation, dissolution, sale of
any collateral, receivership, insolvency, bankruptcy, assignment for
the benefit of creditors, reorganization, arrangement, composition or
readjustment of debt of, or other similar proceedings affecting, the
Issuer or any of the assets of the Issuer;
(e) any invalidity of, or defect or deficiency in, the Preferred
Securities;
(f) the settlement or compromise of any obligation guaranteed
hereby or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor, it
being the intent of this Section 5.03 that the obligations of the
Guarantor hereunder shall be absolute and unconditional under any and
all circumstances.
There shall be no obligation of the Holders to give notice to, or
obtain consent of, the Guarantor with respect to the happening of any of the
foregoing.
SECTION 5.04. Enforcement of Guarantee. The Guarantor and the Guarantee
Trustee expressly acknowledge that (i) this Guarantee Agreement will be
deposited with the Guarantee Trustee to be held for the benefit of the Holders;
(ii) the Guarantee Trustee has the right to enforce this Guarantee Agreement on
behalf of the Holders; (iii) Holders representing not less than a Majority in
liquidation amount of the Preferred Securities have the right to direct the
time, method and place of conducting any proceeding for any remedy available in
respect of this Guarantee Agreement including the giving of directions to the
Guarantee Trustee, or exercising any trust or other power conferred upon the
Guarantee Trustee under this Guarantee Agreement, and (iv) notwithstanding the
foregoing, if the Guarantor has failed to make any Guarantee Payment hereunder,
any Holder of Preferred Securities may institute a legal proceeding directly
against the Guarantor to enforce its rights under this Guarantee Agreement,
without first instituting a legal proceeding against the Issuer, the Guarantee
Trustee, or any other Person.
SECTION 5.05. Guarantee of Payment. This Guarantee Agreement creates a
guarantee of payment and not merely of collection. This Guarantee Agreement will
not be discharged except by payment of the Guarantee Payments in full (without
duplication of amounts theretofore paid by the Issuer).
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SECTION 5.06. Subrogation. The Guarantor shall be subrogated to all (if
any) rights of the Holders against the Issuer in respect of any amounts paid to
the Holders by the Guarantor under this Guarantee Agreement; provided, however,
that the Guarantor shall not (except to the extent required by mandatory
provisions of law) be entitled to enforce or exercise any rights which it may
acquire by way of subrogation or any indemnity, reimbursement or other
agreement, in all cases as a result of payment under this Guarantee Agreement,
if, at the time of any such payment, any amounts are due and unpaid under this
Guarantee Agreement. If any amount shall be paid to the Guarantor in violation
of the preceding sentence, the Guarantor agrees to hold such amount in trust for
the Holders and to pay over such amount to the Holders.
SECTION 5.07. Independent Obligations. The Guarantor acknowledges that
its obligations hereunder are independent of the obligations of the Issuer with
respect to the Preferred Securities and that the Guarantor shall be liable as
principal and as debtor hereunder to make Guarantee Payments pursuant to the
terms of this Guarantee Agreement notwithstanding the occurrence of any event
referred to in subsections (a) through (g), inclusive, of Section 5.03 hereof.
ARTICLE 6
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.01. Limitation of Transactions. So long as any Preferred
Securities remain outstanding, the Guarantor will not declare or pay dividends
on, or redeem, purchase, acquire or make a distribution or liquidation payment
with respect to, any of its common stock or preferred stock or make any
guarantee payment with respect thereto or make any payment of interest, premium
(if any) or principal on any debt securities issued by the Guarantor which rank
pari passu with or junior to the Debentures, if at such time (i) the Guarantor
shall be in default with respect to its Guarantee Payments or other payment
obligations hereunder, (ii) there shall have occurred any event of default under
the Declaration or (iii) the Guarantor shall have given notice of its selection
of an Extension Period (as defined in the Indenture) and such period, or any
extension thereof, is continuing; provided that the foregoing will not apply to
any stock dividends paid by the Guarantor in Common Stock. In addition, so long
as any Preferred Securities remain outstanding, the Guarantor (i) will remain
the sole direct or indirect owner of all of the outstanding Common Securities
and shall not cause or permit the Common Securities to be transferred except to
the extent such transfer is permitted under Section 9.01 of the Declaration;
provided that any permitted successor of the Guarantor under the Indenture may
succeed to the Guarantor's ownership of the Common Securities and (ii) will use
reasonable efforts to cause
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the Issuer to continue to be treated as a grantor trust for United States
federal income tax purposes except in connection with a distribution of
Debentures as provided in the Declaration.
SECTION 6.02. Subordination. This Guarantee Agreement will constitute
an unsecured obligation of the Guarantor and will rank (i) subordinate and
junior in right of payment to all other liabilities of the Guarantor, including
the Debentures, except those made pari passu herewith or subordinate hereto by
their terms, and (ii) pari passu in right of payment with the most senior
preferred stock issued, from time to time, if any, by the Guarantor and with
respect to obligations under other guarantee agreements which the Guarantor may
enter into from time to time to the extent that such agreements shall be entered
into in substantially the form hereof and provide for comparable guarantees by
the Guarantor of payment on preferred securities issued by other AES Trusts.
ARTICLE 7
TERMINATION
SECTION 7.01. Termination. This Guarantee Agreement shall terminate and
be of no further force and effect upon full payment of the Redemption Price of
all Preferred Securities, or upon the distribution of Debentures to Holders of
Preferred Securities and Common Securities in exchange for all of the Preferred
Securities and Common Securities, or upon full payment of the amounts payable in
accordance with the Declaration upon liquidation of the Issuer. Notwithstanding
the foregoing, this Guarantee Agreement will continue to be effective or will be
reinstated, as the case may be, if at any time any Holder must restore payment
of any sums paid with respect to the Preferred Securities or this Guarantee
Agreement.
ARTICLE 8
LIMITATION OF LIABILITY; INDEMNIFICATION
SECTION 8.01. Exculpation. (a) No Indemnified Person shall be liable,
responsible or accountable in damages or otherwise to the Guarantor or any
Covered Person for any loss, damage or claim incurred by reason of any act or
omission performed or omitted by such Indemnified Person in good faith and in a
manner such Indemnified Person reasonably believed to be within the scope of the
authority conferred on such Indemnified Person by this Guarantee Agreement or by
law, except that an Indemnified Person shall be liable for any such loss, damage
or claim incurred by reason of such Indemnified Person's negligence or willful
misconduct with respect to such acts or omissions.
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(b) An Indemnified Person shall be fully protected in relying in good
faith upon the records of the Guarantor and upon such information, opinions,
reports or statements presented to the Guarantor by any Person as to matters the
Indemnified Person reasonably believes are within such other Person's
professional or expert competence and who has been selected with reasonable care
by or on behalf of the Guarantor, including information, opinions, reports or
statements as to the value and amount of the assets, liabilities, profits,
losses, or any other facts pertinent to the existence and amount of assets from
which Distributions to Holders of Preferred Securities might properly be paid.
SECTION 8.02. Indemnification. (a) To the fullest extent permitted by
applicable law, the Guarantor shall indemnify and hold harmless each Indemnified
Person from and against any loss, damage or claim incurred by such Indemnified
Person by reason of any act or omission performed or omitted by such Indemnified
Person in good faith and in a manner such Indemnified Person reasonably believed
to be within the scope of authority conferred on such Indemnified Person by this
Guarantee Agreement, except that no Indemnified Person shall be entitled to be
indemnified in respect of any loss, damage or claim incurred by such Indemnified
Person by reason of negligence or willful misconduct with respect to such acts
or omissions.
(b) To the fullest extent permitted by applicable law, expenses
(including legal fees) incurred by an Indemnified Person in defending any claim,
demand, action, suit or proceeding shall, from time to time, be advanced by the
Guarantor prior to the final disposition of such claim, demand, action, suit or
proceeding upon receipt by the Guarantor of an undertaking by or on behalf of
the Indemnified Person to repay such amount if it shall be determined that the
Indemnified Person is not entitled to be indemnified as authorized in Section
8.02(a).
(c) The provisions of this Article shall survive the termination of
this Guarantee Agreement or the resignation or removal of the Guarantee Trustee.
ARTICLE 9
MISCELLANEOUS
SECTION 9.01. Successors and Assigns. All guarantees and agreements
contained in this Guarantee Agreement shall bind the successors, assignees,
receivers, trustees and representatives of the Guarantor and shall inure to the
benefit of the Holders of the Preferred Securities then outstanding. Except in
connection with a consolidation, merger or sale involving the Guarantor that is
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permitted under Article Ten of the Indenture, the Guarantor shall not assign its
obligations hereunder.
SECTION 9.02. Amendments. Except with respect to any changes which do
not adversely affect the rights of Holders (in which case no consent of Holders
will be required), this Guarantee Agreement may only be amended with the prior
approval of the Holders of not less than a Majority in liquidation amount of the
Preferred Securities. The provisions of Section 12.02 of the Declaration
concerning meetings of Holders shall apply to the giving of such approval.
SECTION 9.03. Notices. Any notice, request or other communication
required or permitted to be given hereunder shall be in writing, duly signed by
the party giving such notice, and delivered, telecopied or mailed by first class
mail as follows:
(a) if given to the Guarantor, to the address set forth below or such
other address as the Guarantor may give notice of to the Holders:
The AES Corporation
1001 North 19th Street
Arlington, Virginia 22209
Facsimile No.: (703) 528-4510
Attention: General Counsel and Secretary
(b) if given to the Guarantee Trustee, to the address set forth below
or such other address as the Guarantee Trustee may give notice to the
Holders:
The First National Bank of Chicago
One First National Plaza, Suite 0126
Chicago, Illinois 60670-0126
Attention: Corporate Trust Administration
Telecopy: (312) 407-1708
(c) if given to any Holder of Preferred Securities, at the address set
forth on the books and records of the Issuer.
All notices hereunder shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be delivered because of a changed address of which no notice was given,
such notice or other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.
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SECTION 9.04. Genders. The masculine, feminine and neuter genders used
herein shall include the masculine, feminine and neuter genders.
SECTION 9.05. Benefit. This Guarantee Agreement is solely for the
benefit of the Holders and subject to Section 3.01(a) is not separately
transferable from the Preferred Securities.
SECTION 9.06. Governing Law. THIS GUARANTEE AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK (WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS).
SECTION 9.07. Counterparts. This Guarantee Agreement may be executed in
counterparts, each of which shall be an original; but such counterparts shall
together constitute one and the same instrument.
SECTION 9.08. Exercise of Overallotment Option. If and to the extent
that Preferred Securities are issued by the Issuer upon exercise of the
overallotment option referred to the second WHEREAS clause, the Guarantor agrees
to give prompt notice thereof to the Guarantee Trustee but the failure to give
such notice shall not relieve the Guarantor of any of its obligations hereunder.
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THIS GUARANTEE AGREEMENT is executed as of the day and year first above
written.
The AES Corporation
By: /s/ Barry Sharp
-------------------------------------
Name: Barry Sharp
Title: Vice President and Chief
Financial Officer
The First National Bank of Chicago
As Guarantee Trustee
By: /s/ Mary Fonti
-------------------------------------
Name: Mary Fonti
Title: Assistant Vice President
20
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement
of The AES Corporation on Form S-3 of our report dated January 30, 1997, except
for the penultimate paragraph of Note 6, as to which the date is March 13, 1997,
the pre-penultimate paragraph of Note 6, as to which the date is August 8, 1997,
the subsequent event paragraph of Note 7, as to which the date is July 15, 1997,
and Note 13, as to which the date is October 27, 1997, appearing in the
Company's Current Report on Form 8-K, dated November 6, 1997, and to the
reference to us under the heading "Experts" in the Prospectus, which is part of
this Registration Statement.
/s/ Deloitte & Touche LLP
- -------------------------
Washington, DC
February 12, 1998
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
The AES Corporation on Form S-3 of our report dated February 28, 1997 relating
to the financial statements of Companhia Energetica de Minas Gerais - CEMIG as
at and for the years ended December 31, 1996 and 1995 prepared in accordance
with accounting principles generally accepted in Brazil, which appears in Item 7
of the Current Report on Form 8-K of The AES Corporation dated July 16, 1997 and
to the reference to us under the headings "Experts" in the Prospectus which is
part of such Registration Statement.
/s/ Price Waterhouse
- --------------------
Auditores Independentes
Belo Horizonte, MG-Brazil
February 10, 1998
EXHIBIT 23.3
INDEPENDENT AUDITORS' CONSENT
We consent to the reference to our firm under the caption "Experts" and to
incorporation by reference in this Registration Statement of The AES Corporation
on Form S-3 of our report dated December 30, 1997 relating to the financial
statements of Companhia Centro-Oeste de Distribuicao de Energia Eletrica-CEEE D2
as at and for the nine months ended September 30, 1997 prepared in accordance
with accounting practices originating in Brazil's Corporation Law, which appears
in Item 7 of the Current Report on Form 8-K of The AES Corporation dated January
9, 1998.
/s/ Ernst & Young
- -----------------
Auditores Independentes
Porto Alegre, Brazil
February 10, 1998
